Payment Cards in France 2010

Introduction

Payment Cards in France is an invaluable guide to one of Europe's most sophisticated card markets. The report provides statistics on market size, competitor market shares and forecasts. It also provides an overview of regulation, competitor activities, issuer strategy and product innovation including developments in contactless, mobile payments, online and prepaid cards.

Scope

*Data and analysis provided on debit cards, credit cards and deferred debit and charge cards.

*Historic market data and competitor market shares are presented for 2004-2008, H1 2009, with forecasts presented to 2013.

*New this year is data covering transactions by merchant category, premium card branding, benefits per card, card primacy and repayment behaviour.

*Concludes with a detailed analysis of developments in the areas of contactless, mobile payments, online and prepaid cards.

Highlights

The French card market is considered to be one of the most sophisticated in Western Europe with a high number of transactions being made for small purchases, although the use of cheques and private label cards is very important.

France is one of the most innovative markets in Europe with the largest and most successful contactless and Near Field Communication projects underway, involving companies such as Carrefour's financial services subsidiary Société des Paiements and Association Européenne Payez Mobile (AEPM).

Due to the difficult economic environment the way consumers use their cards has changed. As a result, the market is expected to have declined by 3.5% in 2009. Within this, however, online payments continue to gain pace, accounting for an estimated EUR42.6 billion in spending.

Reasons to Purchase

*Learn how the French general purpose payment card market has developed over the last five years.

*Understand recent developments in the market in terms of consolidation, new entrants and product innovations.

*Use of Datamonitor's five year forecasts for the market to plan your future strategy.


Report Highlights
The French card market is considered to be one of the most sophisticated in Western Europe with a high number of transactions being made for small purchases, although the use of cheques and private label cards is very important.

France is one of the most innovative markets in Europe with the largest and most successful contactless and Near Field Communication projects underway, involving companies such as Carrefour's financial services subsidiary Société des Paiements and Association Européenne Payez Mobile (AEPM).

Due to the difficult economic environment the way consumers use their cards has changed. As a result, the market is expected to have declined by 3.5% in 2009. Within this, however, online payments continue to gain pace, accounting for an estimated EUR42.6 billion in spending.
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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Key facts and trends in France 2
Demographics 2
Market sizing 2
Regulatory environment 2
Acquiring and processing landscape 3
Forecasting the payment card market in France 3
Competitor and product development in France 3
Online, contactless, prepaid and mobile payments 3
Table of Contents 4
Table of Figures 5
Table of Tables 6
Sizing and Forecasting the Payment Card Market in France 7
Key macroeconomic and consumer data 7
Macroeconomic trends and performance 7
GDP 8
Unemployment 9
Real GDP growth 10
Inflation 11
Demographic and consumer trends 12
Regulatory environment 12
Regulation of French retail banking 12
Key regulatory issues facing the market 14
SEPA 14
Driven by SEPA new initiatives have been launched in the market 15
Interchange is also a SEPA issue 16
EMV migration in France 16
Payment card fraud losses 17
Sizing the payment card market in France 18
Size and performance of the French payment card market 18
Penetration of payment cards 18
Number of payment cards in issue, by type 22
Number of payment card transactions 23
Frequency of use 26
Value of payment card transactions 28
Trends in payment card usage compared to other countries 33
Pay now card usage 33
Pay later card usage 35
Split by merchant category 37
Credit card balances outstanding, revolve rates, usage and repayment behavior 39
ATM and POS terminal numbers 43
Acquiring and processing landscape 44
Merchant acquiring is controlled by Groupement des Cartes Bancaires 44
Processing is typically kept in-house 45
Crédit Agricole is the dominant acquirer in France 45
Forecasting the payment card market in France 45
Forecasting the pay now card market 45
Forecasting the revolving credit card market 47
Forecasting the charge and deferred debit card market 48
Competitor and Product Developments in France 50
Card issuer market shares and performance 50
Credit card market shares 50
Number of credit cards in issue by issue 50
Number of transactions by issue 51
Value of transactions by brand issue 52
Outstanding balances and card repayment rates by issue 53
Pay now card market shares 55
Charge and deferred debit card market shares 55
Significant recent entrants or exits 56
2009: Banques Populaire and Caisses d'Epargne merge to create second largest banking group 56
2006: Mediatis acquires Netvalor 57
2004: Banque Accord acquires Egg France 57
Alliances and partnerships 57
CB announced it is to allow co-branding alliances and partnerships 57
Foreign players enter into co-branded partnerships in France 57
There are a number of alliances and partnerships among consumer credit companies 57
Product design and issuer strategy in France 58
Credit card product strategy 58
Card product features by country and issuer 58
Premium cards by issuer 60
Usage trends by issuer 62
Leading revolving credit products and price points 64
Leading loyalty programs 66
Caisses d'Epargne has a partnership with S'Miles 66
Carte PASS offers discounts at Carrefour outlets 66
Oney offers cashback with its Carte Verte 66
Crédit Agricole offers Le Bonus Gold MasterCard 67
Société Générale in association with American Express, offer a loyalty program aimed at premium customers 67
Card scheme market shares and developments 67
Major card scheme developments 67
Visa Europe completes merger with Carte Bleue 67
Pay now card scheme shares 68
Number of cards in issue 68
Value of transactions 69
Revolving credit card scheme shares 70
Number of cards in issue 70
Value of transactions 71
Charge and deferred debit card scheme shares 72
Number of cards in issue 72
Value of transactions 73
Online, Contactless, Prepaid and Mobile Payments 74
Online payments in France were worth an estimated €42.6 billion in 2009 74
France is the 10th largest market in terms of online transaction value 74
Flight and hotel purchases account for the largest share of transaction values online 74
However, French consumers are not the largest spenders online 75
Credit and debit cards account for the majority of online transaction in France, in line with global trends 76
French consumers are the second largest users of credit cards online 77
Debit cards, on the other hand, are used in line with global average 78
Fraud is the single biggest challenge facing the industry 79
Contactless payments are a $45.8 billion opportunity in France 80
France is the third largest market in terms of potential opportunity in Europe 80
Contactless trials commenced in 2007, driven by MasterCard initiatives 81
The petrol market offers the biggest opportunity for contactless payments, but has witnessed few developments 81
Convenience stores also offer numerous opportunities, but only larger retailers have been targeted thus far 82
Carrefour and MasterCard are involved in one of the largest projects in Europe 83
Fast food is the third major opportunity, but has not received as much attention 83
Public transport provides fewer opportunities in terms of volume, but there are clear benefits from a consumer perspective that could be leveraged 83
There are numerous trials that combine public transport networks and contactless functionality taking place in France 84
Developments in prepaid cards 84
Visa launches prepaid card for money transfers by immigrants in France 84
MasterCard Europe and Accor Services tie up to launch PrePay Solutions 85
Developments in mobile payments 85
AEPM published the functional and technical specifications of Payez Mobile 85
Payez Mobile's NFC trial in France has produced positive results for the industry 86
Leading retailers, issuers and mobile phone operators are at the center of further trials of NFC technology 88
Appendix 89
Regulatory bodies 89
Banque de France 89
Commission Bancaire 89
Comité des Établissements de Crédit et des Entreprises d'investissement (CECEI) 89
Comité de la réglementation bancaire et financière (CRBF) 89
Banking associations 90
Groupement des Cartes Bancaires (CB) 90
Association Française des Etablissements de Crédit et des Entreprises d'Investissements (AFECEI) 90
Association Française des Sociétés Financières (ASF) 90
Fédération Bancaire Française (FBF) 91
Other noteworthy associations 91
Association Française des Banques (AFB) 91
Conseil national du crédit et du titre (advisory bodies) 91
Comité Consultatif 91
Credit bureaus 92
Supplementary data 93
Definitions 101
AAGR 101
Affinity card 101
CAGR 101
Co-branded card 101
Credit card 101
Deferred debit and charge card 101
EMV 101
EPC 101
ePurse 102
Merchant service charge 102
Pay now cards 102
POS terminal 102
Private label cards 102
Methodology 103
Cards and Payments Database 103
Financial Services Consumer Insight is new to our offer, providing new and valuable insight 103
Forecasting methodology 103
Further reading 104
Ask the analyst 105
Datamonitor consulting 105
Disclaimer 105
List of Tables
Table 1: French macroeconomic indicators 7
Table 2: French demographics and consumer trends 12
Table 3: Datamonitor's forecast for the pay now card market, 2008-13f 47
Table 4: Datamonitor's forecast for the credit card market, 2008-13f 48
Table 5: Datamonitor's forecast for the deferred debit and charge card market, 2008-13f 49
Table 6: Fees and APRs applicable to revolving credit cards in France, 2010 65
Table 7: Country-level GDP for 2008 93
Table 8: Unemployment and unemployment rates in Europe 94
Table 9: French GDP growth, 2005-09 94
Table 10: Card penetration in Europe 95
Table 11: Inflation in France (%) 95
Table 12: Transaction split by merchant category in France, €m 96
Table 13: Average transaction value and frequency of use for pay now cards in Europe 97
Table 14: Average transaction value and frequency of use for pay later cards in Europe 98
Table 15: Number of ATMs in Europe, by country 98
Table 16: Population per ATM in Europe, by country 99
Table 17: Number of POS terminals in Europe, by country 99
Table 18: Population per POS terminal in Europe, by country 100
Table 19: Balances outstanding and revolve rates, 2008 100
Table 20: Current relevant publications 104
Table 21: Future relevant publications 105
List of Figures
Figure 1: France has the second highest GDP in Europe in 2009 8
Figure 2: Unemployment is high in France 9
Figure 3: France's economy shrank by 2.2% in 2009 10
Figure 4: Inflation peaked in 2008 at 3.1% 11
Figure 5: Regulatory overview of France, 2008 13
Figure 6: Total fraud losses fell in 2005 but picked up in 2006 17
Figure 7: France has the lowest card penetration among European countries, 2008 18
Figure 8: Pay later cards are more dominant in France compared to pay now cards 19
Figure 9: France has the lowest pay now card penetration in Europe, growing at a AAGR of 11.6% over 2004-08 20
Figure 10: Pay later cards grew at a CAGR of 16.8% over 2004-08 21
Figure 11: Credit cards grew the fastest in France over 2004-08, but the overall market is expected to decline by 1.4% in 2009 22
Figure 12: Deferred debit and charge cards accounted for the largest share of card transactions over 2004-09e 23
Figure 13: Payments cards are primarily used to make transactions at POS terminals in France, 2004-09e 24
Figure 14: Spending split by merchant category is roughly level between pay now and pay later cards, 2008 25
Figure 15: Credit cards are used the least in France, with no significant growth observed during 2004-08 26
Figure 16: Transactions made at POS terminals are expected to have declined in 2009 27
Figure 17: Charge/deferred debit cards account for the majority of transaction values, 2004-09e 28
Figure 18: The value of ATM transactions is expected to increase in 2009, compared to POS transactions 29
Figure 19: The food and drink segment accounts for an important share of transaction value in France 30
Figure 20: Average transaction values are highest for credit cards, 2004-08 31
Figure 21: The average transaction value for ATMs was higher than for POS terminals over 2004-09 32
Figure 22: As of 2008, the average frequency of pay now card usage in Europe is increasing, whereas the average transaction value is decreasing 33
Figure 23: France is slightly behind Scandinavian countries in terms of turnover per pay now card, 2008 34
Figure 24: France has the highest frequency of use for pay later cards in Europe, 2008 35
Figure 25: Turnover per pay later card is highest in France among all European countries 36
Figure 26: Pay now POS transaction values by merchant category is more or less even across Europe, 2008 37
Figure 27: Pay later spending by merchant category varies considerably across Europe, 2008 38
Figure 28: French consumers are not the most loyal in Europe to their primary brand, but secondary cardholding is also important 39
Figure 29: After Germany, French consumers use credit cards more frequently than consumers in the rest of Europe 40
Figure 30: France is one of the smallest credit card markets in Western Europe, with an estimated 30% revolve rate per balance outstanding in 2008 41
Figure 31: Similar to the Netherlands and Germany the majority of cards in France are paid in full at the end of each month 42
Figure 32: The growth of the French ATM network slowed down in 2006 43
Figure 33: The sustained increase in POS terminals in France reflects the growth in acceptance 44
Figure 53: Growth in the value of transactions is forecast to drive the pay now market forward, 2006-13f 46
Figure 54: The usage of credit cards is predicted to be a primary driver in the market, 2008-13f 48
Figure 55: Usage of deferred debit and charge cards is predicted to be a primary driver of growth in the market, 2008-13f 49
Figure 34: Caisses d'Epargne is the leading credit card issuer in France 50
Figure 35: Caisses d'Epargne accounts for both the highest number of credit card transactions and frequency of use 51
Figure 36: Crédit Mutuel and Oney are the top players in terms of total transaction value and average transaction value, respectively, 2008 52
Figure 37: The revolve rate per outstanding balance in France is more or less even among the top four issuers H1 2009 53
Figure 38: The way consumers pay off their credit cards varies depending on the issuer 54
Figure 39: Crédit Mutuel/CIC is the largest pay now card issuer in France 55
Figure 40: Crédit Agricole dominates the deferred debit and charge card market in France 56
Figure 41: Cashback is a more common feature in France than in other European markets 58
Figure 42: Cashback is an important feature of the credit card market in France in terms of consumers' perceptions 59
Figure 43: French issuers tend not to offer premium-branded products as a way of distinguishing their customer bases 60
Figure 44: The majority of issuers in France offer standard cards, with fewer premium branded products available 61
Figure 45: Primary cardholding is more or less even across the market, unlike other types of cards 62
Figure 46: No clear pattern emerges in terms of usage by brand in France 63
Figure 47: Visa has the highest number of pay now cards in issue, 2004-08 68
Figure 48: Visa accounts for the highest value of pay now card transactions, 2004-08 69
Figure 49: Visa holds the highest market share in credit cards issued in France, 2004-08 70
Figure 50: American Express became the leading player in terms of transaction value in 2008 71
Figure 51: MasterCard is the dominant player in terms of charge and deferred debit card schemes in France 72
Figure 52: MasterCard and Visa are close in terms of transaction value in the charge and deferred debit card market 73
Figure 56: Online payments in France reached an estimated €42.6 billion in 2009 75
Figure 57: French consumers are not the largest spenders online, 2009 76
Figure 58: Credit and debit cards are by far the largest payment tools online, both in France and globally 77
Figure 59: French consumers are the second largest users of credit cards online 78
Figure 60: Debit card usage in France online is in line with the global average 79
Figure 61: Contactless payments are a $45.8 billion opportunity in France 81
Figure 62: The petrol market offers the biggest opportunity for contactless payments 82
Figure 63: In the Payez Mobile trial, consumers making NFC payments above €20 could pre-authorize their payments using the keypad on their phones 87

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