As one of the largest payment cards markets in Europe, France has a high standard to maintain. With a high penetration of payment cards and average annual spend compared to the rest of Europe, things seem to be close to perfect in the marketplace. However, regulation is rearing its head to possibly spoil the party
France is one of Europe’s largest payment cards markets, accounting for 11.5% of Europe’s total transaction value and 14.0% volume in 2014. France has a high penetration of payment cards, at 1.3 cards per inhabitant as of 2014 and the average annual spend per card is high compared to the rest of Europe.
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A typical feature of France’s payment cards is multifunctionality, where debit and credit functions, provide access to several accounts. Crédit Agricole’s MasterCard Dual Action, is a credit card which can be used as a debit card by selecting the ‘Cash’ option at the POS.
Consumer awareness, infrastructure, and contactless technology has grown transaction volume and value, and to compete, mobile operators and technology providers have introduced quicker and more efficient digital payment platforms such as Orange Cash, Hype and SlimPay.
Banks in France focus increasingly on providing services through low-cost digital channels. BNP Paribas launched the first ‘digital only’ bank in France in June 2013. Likewise, the German-based financial service provider Number26 launched the ‘mobile only’ bank in France, Greece, Ireland, Italy, Slovakia, and Spain in December 2015.
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By GlobalDataOrange France acquired a 65% stake in the French bank Groupama Banque in January 2016, with plans to launch a ‘mobile only’ bank early 2017, offering savings, loans, insurance and cards. From October 2014, Twitter users in France, no matter who they bank with, can tweet money to one another through BCPE.
Contactless on the increase
The number of contactless cards increased between 2010 and 2014, going from 3.4 million in 2010 to 50 million in 2015, representing 60.1% of all French payment cards.
The same trend is expected over the next five years. Banks and POS solution providers are introducing product and service offerings to increase the uptake of contactless payments.
E-commerce driving card-based payments
E-commerce in France posted a CAGR of 16.40% over the last five years, growing from $41.1bn (31bn) in 2010 to $75.4bn in 2014. High online and mobile penetration, increasing consumer confidence in online transactions, and secure online gateways drove this growth.
Another contributing factor to the growth of e-commerce was an increased focus on customer retention tactics by retailers, including customised e-mails based on buying patterns, product and services ads on their social networking pages, and on-site shopping personalisation features. These initiatives have led to a healthy relationship with customers, and resulted in repeat purchases.
With slightly more than half of all internet users in France shopping online, lower levels of debt compared with other European countries, and a relatively young population, banks and card issuers have a platform for growth.
Payment cards remain the most popular payment method among online shoppers. Issuers such as BNP Paribas, Crédit Mutuel and Banque Accord offer perks such as cashback, discounts, purchase protection insurance, extended warranty, zero card fraud liability and flexible repayments for online purchases.
Regulation may thwart prepaid market
In the wake of terrorist activity, the French government in March 2015 introduced a regulation laying restrictions on the usage of cash and prepaid cards to curb any form of terrorism financing. Under the new regulation, any cash transaction above $1,110.80 cannot be accepted by merchants. Similarly, card issuers may not issue prepaid cards without valid ID. While this is expected to encourage electronic payments in general, growth in the prepaid cards market is likely to be challenged.
