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An overview of cashless payment instruments in France

What are cashless payment instruments?  

Unlike cash payments (which use banknotes and coins), cashless payment instruments are systems that enable funds held in accounts at credit, payment or similar institutions (such as the Caisse des Dépôts et Consignations, the French Treasury, the Banque de France, etc.) to be transferred to a payee on receipt of a payment order.

As part of its role in the supervision of payment systems, the Banque de France compiles annual statistics on cashless instruments, giving an insight into how they are used in France.

“Traditional” cashless payment instruments

There are a number of different cashless payment instruments available in France, used for a wide variety of purposes. The main ones are listed below:

 

Payments Cards

The French public’s preferred means of payment, thanks to its ease of use and the fact that it is so widely accepted. Payment cards are used in conjunction with a PIN code, both to make payments and withdraw cash.

Transfers

Bank transfers are a method of transferring funds between two accounts. They are mainly used by companies to pay suppliers and wages, and by government administrations to pay welfare benefits.

Direct debits

Direct debits allow payees to deduct payments automatically from the payer’s account. The payer does not have to send an authorization each time a payment is deducted. Direct debits are therefore typically used for recurrent payments or instalments such as electricity bills or Internet and telephone subscriptions. It is the second most popular payment instrument in France.

Interbank payment orders (TIP)

These are very similar to direct debits, except that the payer must specifically authorize each payment by signing a paper slip and sending it to the beneficiary.

Electronic payment orders (Télérèglement)

These are also similar to direct debits, with the exception that the beneficiary can only draw the funds once he/she has received an electronic authorization for each transaction from the payer. Electronic payment orders are a legal obligation for the collection of certain taxes (such as VAT and corporate tax for companies generating more than a certain level of turnover).

Checks

A cheque is a written document authorising the transfer of funds from one person to another, without the need to transport money or use an electronic system. There has been a steady decline in the number of cheques issued over the past two decades, and this trend has accelerated in recent years.

Bills of exchange

A bill of exchange is a written order by one party, called a “drawer”, asking another party or “drawee” to pay a certain sum of money on a given date. They are rarely used these days, accounting for less than 1% of the total annual volume of payments.

Promissory notes

A promissory note is a signed document containing a written promise by one party, the “issuer”, to pay a stated sum to another specified person, the “bearer”, on a given date. Like bills of exchange, they are rarely used these days.

A market that is constantly evolving

The past decade has seen the emergence of new means of payment, spurred by the rapid expansion of Internet and advances in digital technology. These new services offer a range of innovative functions.

They include:

Contactless Payments

Contactless payment systems are devices that allow users to make small payments rapidly and without entering a PIN code, simply by waving a card or mobile telephone over a payment terminal. They are popular with both retailers and users as they speed up transactions at the cash till and are easier to use than traditional payment cards.  

Digital Wallets

Digital wallets are a fast and easy way to make payments via the Internet without entering sensitive data (i.e. payment card number, expiry date and visual cryptogram). The card data is entered once, when the wallet is created. The user then only has to enters his/her ID (e.g. a mobile number or email address) to carry out transactions.

 

Updated on: 02/16/2017 12:32