French Payment Services: Code Monétaire, ACPR Supervision, and PSD2 Implementation

French payment services law governs the provision of payment services in France, including payment transactions, electronic money, and payment infrastructure. The field is regulated by the Code monétaire et financier and supervised by the Autorité de Contrôle Prudentiel et de Résolution (ACPR). French law implements the EU Payment Services Directive (PSD and PSD2) and has developed a comprehensive framework for payment institutions, electronic money institutions, and payment system oversight.

The Code Monétaire et Financier

The Code monétaire et financier (Monetary and Financial Code) codifies French legislation on money, banking, and financial services. The Code establishes the legal framework for payment services, including the definition of payment services, the authorisation and supervision of payment service providers, and the rights and obligations of payment service users. The Code is divided into legislative and regulatory parts and is regularly updated to reflect EU directives and market developments.

The Code defines a payment service as any service that enables the transfer of funds, including payment transactions, direct debits, credit transfers, payment card transactions, and money remittance. The definition aligns with the EU Payment Services Directive and covers both traditional bank payment services and new payment services offered by non-bank providers.

ACPR Supervision

The Autorité de Contrôle Prudentiel et de Résolution (ACPR) is the French authority responsible for supervising banks, insurance companies, and payment service providers. The ACPR is an independent administrative authority attached to the Banque de France. It authorises payment service providers, conducts ongoing supervision, and enforces compliance with applicable regulations.

The ACPR examines the governance, financial soundness, and compliance arrangements of payment service providers. It conducts on-site inspections, reviews audit reports, and monitors financial indicators. The ACPR may impose sanctions for regulatory violations, including warnings, reprimands, fines, and withdrawal of authorisation.

SEPA Implementation

The Single Euro Payments Area (SEPA) is an EU initiative to harmonise payment systems across the eurozone and other participating countries. France has fully implemented the SEPA requirements, including the harmonisation of credit transfers (SCT), direct debits (SDD), and payment card transactions. The French payment system has been adapted to the SEPA standards, with the migration of domestic payment instruments to the SEPA formats.

The implementation of SEPA in France required significant changes to the national payment infrastructure, including the replacement of the national direct debit system and the adaptation of payment processing systems. The Banque de France played a central role in coordinating the transition to SEPA, working with banks, payment institutions, and user groups.

Payment Institutions

The PSD introduced the category of établissements de paiement (payment institutions), which are non-bank entities authorised to provide payment services. Payment institutions are regulated entities that must obtain authorisation from the ACPR and comply with ongoing regulatory requirements. They are subject to capital requirements, governance obligations, and customer fund protection rules.

Payment institutions may offer a range of payment services, including payment accounts, credit transfers, direct debits, payment cards, and money remittance. They may also engage in certain ancillary activities, such as currency exchange and payment processing. Payment institutions are subject to lighter regulation than banks, reflecting the lower risk profile of their activities.

Electronic Money

Electronic money (monnaie électronique) is defined as electronically stored monetary value that is accepted as a means of payment by persons other than the issuer. Electronic money institutions (établissements de monnaie électronique) are regulated entities that issue electronic money and provide related services. The legal framework is based on the EU Electronic Money Directive (2009/110/EC).

Electronic money institutions must obtain authorisation from the ACPR and comply with capital requirements, fund protection rules, and anti-money laundering obligations. The issuance of electronic money is subject to the requirement of redeemability: the holder of electronic money has the right to redeem it at par value at any time. Electronic money institutions may also provide payment services.

PSD2 Implementation

The Revised Payment Services Directive (PSD2, 2015/2366/EU) was transposed into French law through an ordinance of 9 August 2017 and subsequent implementing decrees. PSD2 introduced significant changes to the French payment services landscape, including the regulation of new payment services (payment initiation services and account information services), stronger security requirements (strong customer authentication), and enhanced consumer protections.

The implementation of PSD2 in France required amendments to the Code monétaire et financier and the adaptation of regulatory practices. The ACPR developed a framework for authorising and supervising payment initiation service providers (PISPs) and account information service providers (AISPs). The Banque de France contributed to the development of technical standards for strong customer authentication and secure communication.

Strong Customer Authentication

PSD2 introduced requirements for strong customer authentication (authentification forte du client) for electronic payment transactions. Strong customer authentication requires the use of at least two of three elements: knowledge (something the user knows), possession (something the user has), and inherence (something the user is). The authentication must be dynamically linked to the specific transaction.

The implementation of strong customer authentication in France has required significant investments by banks and payment service providers. The technical standards, developed by the European Banking Authority, set out the detailed requirements for authentication, including exemptions for low-value transactions and transactions with trusted beneficiaries. The ACPR monitors compliance with the authentication requirements.

Consumer Protection

French payment services law provides extensive consumer protections. The Code monétaire et financier implements the PSD requirements for transparency, including pre-contractual information, disclosure of fees and charges, and statements of account. The consumer has the right to dispute unauthorised transactions and to obtain a refund for unauthorised payments.

The liability rules for unauthorised transactions balance the interests of the payment service user and the provider. The user is generally liable only for the first €50 of losses resulting from an unauthorised transaction, unless the user acted fraudulently or with gross negligence. If the payment service provider fails to apply strong customer authentication, the provider is fully liable for the loss.

Payment System Oversight

The Banque de France oversees payment systems to ensure their safety and efficiency. The oversight function examines the legal, financial, and operational aspects of systemically important payment systems. The Banque de France applies international standards for payment system oversight, including the Principles for Financial Market Infrastructures (PFMI).

The French payment system infrastructure includes TARGET2 for large-value payments, SEPA clearing systems for retail payments, and payment card processing systems. The Banque de France monitors the resilience and integrity of these systems, including their capacity to withstand operational disruptions and financial shocks.