France is one of Europe’s largest payment cards markets, accounting for 11.5% of Europe’s total transaction value in 2014, and 14% of its transaction volume. France’s payment cards market is mature, with a high penetration of payment cards, at 1.3 cards per inhabitant as of 2014
The average annual spend per card is very high in France compared to other European markets such as the UK, Germany, Italy and Spain.
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A typical feature of France’s payment cards market is the availability of multifunctional cards. A single payment card is integrated with debit and credit functions. Multi-functionality cards are attracting French consumers by providing access to several accounts via one card. The most popular combination of functionalities is debit and credit facilities. Crédit Agricole is offering MasterCard Dual Action, a credit card which can be used as a debit card by selecting the ‘Cash’ option at payment terminals.
The volume and value of payment card transactions grew largely due to the familiarity of their use, the availability of infrastructure, and the emergence of contactless technology.
However, to capture a larger share of the market and increase their customer base, mobile operators and technology providers are introducing quicker and more efficient digital payment platforms such as Orange Cash, Hype and SlimPay.
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By GlobalDataThe focus of banks in France has now shifted on providing banking and financial services through low-cost channels such as online and mobile banking. BNP Paribas launched the first ‘digital only’ bank in France in June 2013, allowing its customers to conduct banking via mobile phones or tablets. Likewise, the German-based financial service provider Number26 launched the ‘mobile only’ bank in France, Greece, Ireland, Italy, Slovakia, and Spain in December 2015.
Orange France acquired a 65% stake in the French bank Groupama Banque in January 2016, with plans to launch a ‘mobile only’ bank in early 2017. The services offered will cover all standard banking products such as savings, loans, insurance services and payment cards.
In France, social media has been used by banks to help enable consumers to transfer funds quickly and securely via a social platform. From October 2014, all Twitter users in France, no matter who they bank with, can tweet money to one another through BCPE.
Contactless payments to increase scope of card payments
The French payment cards market recorded a large-scale uptake of contactless technology during the between 2010 and 2014, according to the French Association of Contactless Mobile (AFSCM), the number of contactless transactions increased to 21.9 million as of September 2015, registering a staggering rise of 218% over September 2014.
Between August and September 2015, the number of contactless payments increased by 20.8%. As of September 2015, there were 332,169 retailers with POS terminals equipped with contactless technology; an increase of 44% over September 2014.
The ease of making quick payments using contactless cards has grown in popularity among both consumers and retailers in France. An increase in the number of retail outlets accepting contactless payments enabled consumers to opt for contactless card payments. The number of contactless cards increased between 2010 and 2014, going from 3.4 million in 2010 to 50 million in 2015, which represented 60.1% of all French payment cards in circulation.
The number of contactless cards and transaction volumes are expected to follow the same trend over the next five years.
E-commerce driving card-based payments
E-commerce in France posted a CAGR of 16.40%, growing from $41.1bn (31.0bn) in 2010 to $75.4bn in 2014. High online and mobile penetration, increasing consumer confidence in online transactions, and the presence of secure online gateways drove this growth.
One of the contributing factors to the growth of e-commerce was an increased focus on customer retention tactics used by retailers, which included customised e-mails to consumers based on their buying patterns, display ads about products and services on their social networking pages, and on-site personalisation features offering them an enhanced shopping experience.
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 involved in online shopping, with lower levels of indebtedness 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 benefits such as cashback, reward points, discounts, purchase protection insurance, extended warranty, zero card fraud liability and flexible repayment options on their cards when purchases are made online.
Prepaid cards market is likely to be challenged due to the French government regulation
In wake of terrorism activities in the country, 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 are not allowed to issue prepaid cards without consumers submitting a valid proof of identity. While this is expected to encourage electronic payments in general, growth in prepaid cards market is likely to be challenged.
Growing POS terminal installations
The number of POS terminals recorded a CAGR of 2.98%, rising from 1.4 million in 2010 to 1.6 million in 2014. This was supported by an increase in the number of POS terminal installations at smaller retail outlets, enabling the growth of card-based payments. POS terminals are expected to reach 1.9 million in 2019, owing to an increase in the number of retailers installing POS terminals supportive of contactless payments.
A range of mPOS solutions are available in France. In May 2015, iZettle launched a card reader exclusively for small merchants, allowing them to accept m-payments by connecting the device to a smartphone.
The card reader is offered free of charge, but merchants pay a fee which ranges from 1.5-2.7%, depending on the volume of transactions put through the reader. Similarly, medium and large businesses can opt for a pro reader for a one-time fee of $87.70.
Payleven and SumUp are other mPOS solution providers in France. Payleven’s mobile card reader can be connected via Bluetooth, and is compatible with the iOS and Android operating systems. The reader costs $76.60, and the company charges a fixed fee of 2.7% on transactions. SumUp offers PIN+card reader for a one-time fee of $87.70, with a flat-rate transaction fee of 1.75%.
Growing popularity for private label cards
A characteristic of France is the popularity of private label cards. Unlike bank-issued credit cards, these cards have less stringent qualification requirements for applicants.
In addition, a number of benefits are attached to these cards, such as discounts, rewards, instalment facility, flexible payment options, and other promotional offers to make these cards more appealing to consumers. These factors partially contributed to the low penetration of bank-issued credit cards, consequently affecting their transaction values and volumes.
In France, private label card issuers collaborate with merchants from different categories such as supermarkets, department stores, car repairs, car manufacturers, electronic and digital content, entertainment, home furniture and home improvement to issue co-branded private label cards. Some of the prominent private label issuers in France are: Cetelem, Franfinance, Sofinco and Cofinoga.
