Oversight of cashless means of payment

Challenges and objectives

Cashless payments play an increasingly prominent role in the French monetary system. Their security is thus paramount in order to maintain public trust in the currency and guarantee the smooth functioning of the economy. In short, consumers need cashless payment instruments that are efficient, reliable and secure.

In overseeing cashless means of payment, the Banque de France must take care to avoid stifling competition and innovation in what is clearly a rapidly evolving and hi-tech field. The institution therefore refrains from promoting any particular technological solution.

Legal framework

The Banque de France was given specific responsibility for the oversight of cashless payment instruments by the law of 15 November 2001, which requires it to ensure “that the means of payment other than fiduciary currency are secure and that the regulations applicable thereto are pertinent” (Article L.141-4 of the French Monetary and Financial Code).

The scope of the Banque de France’s oversight is broad. Article L. 311-3 of the Monetary and Financial Code defines cashless means of payment as “any instrument which enables any person to transfer funds (…), regardless of the medium or the technical process used”. In practice, this covers all bank transactions, as well as all activities relating to the issuance and management of non-cash payment instruments. The law of 28 January 2013 extended this scope further to cover special payment vouchers such as luncheon and holiday vouchers, which are subject to special legal and regulatory requirements. Moreover, the Banque de France is responsible for verifying the security and efficiency of work carried out by third-party service providers on behalf of credit and payment institutions.

In order to perform its duties, the Banque de France conducts oversight assessments of existing payment instruments and may request access to any information it deems useful. On the basis of these checks, under Article L.141-4 of the Monetary and Financial Code, “if it considers that any means of payment offer insufficient guarantees of security, it may recommend that the issuer take all appropriate measures to remedy the situation. If such recommendations are not followed, it may, having obtained the issuer’s observations, decide to draft a negative opinion for publication in the Official Journal”.

Eurosystem oversight framework for electronic payments (PISA)

The oversight mission of the Banque de France is part of a wider European approach. The founding treaties of the European Union (Article 127.2 of the Treaty on the Functioning of the European Union) and the Statutes of the ESCB and the ECB (Articles 3.1 and 22) mandate the Eurosystem to promote the smooth operation of payment systems.

In this context, in 2021, the Eurosystem has published a new oversight framework for electronic payment instruments, schemes and arrangements (PISA), following a public consultation in 2020. This framework replaces the previous Eurosystem oversight approach and standards for payment instruments, including all the related oversight frameworks for cards, direct debits and credit transfers, as well as the security objectives for e-money. It also aims at including innovative market players in the oversight scope, such as mobile payment solutions and electronic wallets.

The PISA framework establishes a set of oversight principles, based on international standards, to assess the safety and efficiency of electronic payment instruments, schemes and arrangements. It will come into effect on November 15, 2022.

The Eurosystem oversight will focus on those schemes and arrangements that have reached a considerable level of importance for the euro area. The criteria that the Eurosystem takes into consideration are laid out in the exemption policy. The PISA framework also includes an assessment methodology with key considerations and assessment questions for each of the oversight principles. This will help to ensure consistent and harmonised application of the PISA framework across the overseen entities.

In the past, the Banque de France has defined a number of guidelines for specific instruments as well, such as the oversight frameworks for cheques (July 2005) and universal service employment cheques (February 2007, revised in 2014). It also published an oversight framework for special payment vouchers in 2015, along with an assessment guide for issuers.

Off-site controls and on-site inspections

As part of its oversight, the Banque de France carries out off-site assessments, which consist in verifying the self-assessments produced by payment instrument issuers in order to check whether they comply with the Eurosystem oversight framework for electronic payment instruments, schemes and arrangements (PISA).

To gain a better insight into user habits and the risks associated with cashless payments, the Banque de France also compiles regular statistics on aspects such as the use of payment instruments and incidents of fraud.

The ACPR consults the Banque de France when processing applications for licences from payment institutions and electronic payment institutions. Under Article L. 141-4 of the Monetary and Financial Code, it asks the Banque de France to assess the technical, IT and organisational resources put in place by the applicants to ensure the security of their proposed activities.

In addition to these activities, the Banque de France carries out several on-site inspections each year. These can be at payment service providers, payment card providers or technical service providers, and their aim is to verify as broad as possible a selection of payment instruments or methods of payment origination. The inspections give the Banque de France greater insight into those segments of the market that need to be monitored more closely.

Oversight frameworks and assessment guides

Eurosystem oversight framework for electronic payments (PISA)

Banque de France public oversight frameworks