1. What is a non-cash mean of payment ?
Non-cash means of payment, which include payment cards, cheques, credit transfers and direct debits, are mechanisms that enable funds held in accounts with credit institutions and assimilated institutions (the Trésor public, the Caisse des dépôts et consignations, the Banque de France…) to be transferred following the receipt of a payment order. They are the opposite of cash, i.e. banknotes and coins.
A series of operations is required to make non-cash payments and transfer funds from payer to payee. Under French law, these operations - which are considered to be bank operations - may be performed only by institutions that are subject to prudential rules and supervised by the Commission Bancaire (without prejudice to certain derogations). The following diagram describes the main stages of a non-cash payment.
Source : Bank for International Settlements Clearing and Settlement arrangements for retail payments in selected countries
The
transaction phase encompasses the creation, validation and transmission of a payment order. Depending on the type of instrument, the payment order may be initiated by the payer (e.g. a credit transfer) or by the payee (e.g. a direct debit). A number of operations occurs during this phase, aiming mainly at verifying the identity of the parties involved in the transaction, the authenticity of the payment instrument and the integrity of transaction data.
During the
clearing and settlement phase, credit institutions and assimilated institutions exchange their respective claims arising from non-cash payments and settle the net balance of claims. In France, retail payment flows - so called because each individual payment corresponds to a small amount - are exchanged bilaterally via a common facility like the CORE payment system. Net balances are then settled in a large-value payment system like
TARGET2 Banque de France.
2. Use of non-cash means of payment in France and Europe
France
The use of non-cash means of payment is widespread in France. In 2006
1, each French account holder used to make in average 228 non-cash payments. And these instruments are gaining in popularity: in 2000, this rate was estimated at 197.
A broad offer of non-cash means of payment is available in France, from "traditional" payment media like cheques or credit transfers, to instruments that emerged alongside automated processing technologies, such as payment cards, which were introduced in France in the 1970s. Innovative products for use in electronic and mobile payments are also offered.
Cheques continue to be a popular payment instrument in France. Almost more than 3.9 billions of cheques were exchanged in 2006, and, in number of transactions, cheques supplied the medium for 26% of all domestic payments. Even so, the use of cheques follows a downward trend - in 2000, cheques accounted for 37% of payments - whereas the part of card payments increases.
In 2006, payments by bank cards accounted for almost 38% of transactions in France. There is a relatively abundant offer of payment cards, which includes "four party" and "three party" cards.
Credit transfers and direct debits are stabilizing, accounting for 18% and 18% of transactions respectively. Up to now, electronic money systems play a marginal role and are used for 0.13% of payments in volume.
|
|
Face-to-face
|
Remote |
Recurrent payments |
One-off payments |
Use by payers(2)
|
Number of transactions(3)
|
%
|
|
|
|
|
|
|
Individuals |
Corporate |
2006 (billion) |
|
|
Cheque |
X
|
X
|
X
|
X
|
W |
M
|
3.9 |
26%
|
|
Bank card (payment) |
X
|
(4)
|
|
X
|
W |
L |
5.6 |
38%
|
|
Credit transfer |
|
X
|
X
|
X
|
L |
W |
2.6 |
18%
|
|
Direct debit |
|
X
|
X
|
|
W |
L |
2.7 |
18%
|
|
Total
|
|
|
|
|
|
|
14.8 |
100%
|
|
Number of transactions in 2006 and types of use by means of payment
Europe
Use of non-cash means of payment in the euro area in 2006
Relative shares of payment instruments in the euro area
Source: European Central Bank, Blue Book 2007
In the euro area, each person made 165 cash payments on average in 2006. The use of non-cash means of payment has been increasing in volume at a rate of roughly 6% a year since 2000, a rise that can be explained by the growing popularity of payment cards.
The use of non-cash means of payment is more widespread in France than in most of the other European countries. Non-cash payments made in France account for around 21% of all such payments in the EU. Each French person made in average 236 non-cash payments in 2006.
France also stands out because of the continuous importance of cheques. In 2006, cheque usage in France accounted for 78% of all cheques exchanged within the euro area.
Like in France, payment cards are Europe's most commonly used means of payment in the numbers of transactions, ahead of credit transfers and direct debits. The relative and absolute shares of these three types of payment instrument are rising steadily to the detriment of cheques.
(1)Source: Banque de France
(2)W: widespread use, M: moderate use, L: little use
(3)Source: Banque de France
(4)Currently, cardholders use this option essentially by communicating their card number.
