The payment card, once a simple withdrawal and payment tool, has become a central instrument in our economy. Its legal regime, initially fragmented and based on ordinary contract law, has undergone far-reaching changes under the impetus of European Union law. These developments have resulted in a dense regulatory framework designed to harmonise practices, enhance the security of transactions and protect consumers. To navigate this complex environment, the assistance of a lawyer with expertise in payment services law is often essential. Our complete guide to payment cards under french banking law offers a first approach to the essential concepts that need to be mastered.
Changes to the legal framework for payment cards in France
From a few scattered provisions to a body of rules harmonised at European level, the legal regime governing payment cards has become increasingly complex, made necessary by technological developments and the proliferation of uses.
From general law to the first specific regulations (1991 Act, 2001 Act)
For many years, payment cards operated without any specific regulations. The relationships between the various players (issuers, cardholders, merchants) were mainly governed by the contracts entered into and the general law of obligations. It was not until the Act of 30 December 1991 on the security of cheques and payment cards that the first legislative framework was outlined. In particular, this law established the principle that payment orders given by card are irrevocable, except in a limited number of cases such as loss or theft.
Ten years later, the Everyday Security Act of 15 November 2001 strengthened this system, in particular to protect users in the event of fraudulent use of their card. It introduced a system of limited liability for cardholders, capping their share of losses before stop payment at a lump sum, except in cases of gross negligence on their part. These national texts, although fundamental, have proved insufficient to provide a framework for a rapidly expanding and increasingly cross-border payments market.
The decisive influence of European directives (PSD1, PSD2)
The real regulatory revolution came from the European Union, with the adoption of the first Payment Services Directive (PSD1) in 2007. Transposed into French law by the Order of 15 July 2009, this directive created a unified legal framework for all payment services within the Single Euro Payments Area (SEPA). It introduced key concepts such as the notion of "payment service provider" and strengthened the obligations to provide information and transparency to users.
Faced with rapid technological developments, particularly the rise of online and mobile payments, a review of this framework appeared necessary. The second Payment Services Directive (PSD2), adopted in 2015 and transposed by the Order of 9 August 2017, marked a new stage. Its major contribution is the introduction of the requirement for strong customer authentication for most electronic payments, in order to drastically reduce fraud. PSD2 has also opened up the payments market to new players, "payment initiation service providers" and "account information service providers", thereby fostering innovation in the financial sector.
Bringing cards under the common payment services regime
With the European directives, the payment card ceased to be a separate legal object and became fully integrated into the broader category of "payment instruments", subject to a common and detailed regime.
Cards as payment instruments within the meaning of the Monetary and Financial Code
The Monetary and Financial Code, amended by successive transpositions of directives, no longer defines the payment card as such. Instead, it defines it as a "payment instrument with a personalised security feature". This functional approach makes it possible to encompass all forms of card, whether physical, dematerialised in a smartphone or virtual for online payments. A card transaction is now classified as a payment transaction, and its provision as a payment service, bringing the entire ecosystem under a single set of regulations.
The primacy of Articles L. 133-1 et seq. of the CMF
The core of the legal regime applicable to payment cards can now be found in articles L. 133-1 et seq. of the French Monetary and Financial Code. This section of the Code governs in detail the rights and obligations of users and payment service providers. It governs essential aspects such as consent to the transaction, irrevocability of the payment order and execution deadlines, but above all it establishes a precise liability regime in the event of an unauthorised transaction. In the event of fraud, this system determines how financial losses are shared between the cardholder and his or her bank, notably by introducing a maximum deductible of 50 euros to be borne by the customer, with certain exceptions.
Relationship with previous case law solutions
While the new legal framework is particularly detailed, it has not erased all previous case law. On issues not expressly covered by the legislation, such as some of the relationships between card issuers and accepting merchants, the solutions developed by the courts over the years remain relevant. Similarly, the general principles of contract law continue to play a suppletive role. An analysis of the legal regime governing payment cards therefore requires a fine-tuned articulation between the new provisions of the Monetary and Financial Code, which form the main foundation, and the legacy of case law, which supplements them on certain specific points. This complex whole clearly illustrates how the renewed legal framework for payment services has profoundly redefined the rules of the game.
Future developments: RSP1 and DSP3
The payments sector is undergoing constant technological change, which means that the European regulatory framework needs to evolve. The European Commission's recent proposals aim to adapt the legislation to the new challenges of security, competition and innovation.
The European Commission's proposals (2023) and their objectives
In June 2023, the European Commission presented a new legislative package to modernise the framework for payment services. This package comprises two main texts: a proposal for a Payment Services Regulation (PSR1), which is intended to apply directly in all Member States, and a proposal for a Third Payment Services Directive (PSD3), which will supplement the Regulation on aspects requiring national transposition, particularly with regard to the authorisation and supervision of payment institutions. The aim is to respond to market developments, such as the emergence of new forms of fraud, and to further strengthen consumer protection while promoting an increasingly competitive and innovative payments market.
Strengthening security and preventing fraud
One of the main thrusts of these new proposals is to step up the fight against fraud. Faced with the growing sophistication of social engineering techniques (such as spoofing, where a fraudster poses as a bank adviser), the draft PSR1 regulation lays down new obligations for payment service providers. In particular, they are to be allowed, on a voluntary basis, to exchange information with each other on fraud, in order to better detect and prevent it. New liability rules are also envisaged to better protect the victims of these sophisticated frauds. Strong customer authentication, a pillar of PSD2, will be made more accessible, particularly for people with disabilities or limited digital skills.
Improved fee transparency and accessibility
Transparency remains a key concern for the European legislator. The new proposals aim to improve consumer information on the conditions and charges associated with payment services. Particular emphasis is placed on the clarity of charges for cash withdrawals from ATMs. The texts also aim to ensure that payment services are more accessible to all, taking into account the specific needs of the elderly and disabled. These changes reflect a desire to create a payments market that is not only secure and efficient, but also genuinely inclusive.
Solent avocats: your expert in payment services law
The regulation of payment cards and related services is a technical field that is constantly evolving. Whether you are a private individual faced with fraud, a retailer wondering about your obligations or a company developing innovative payment solutions, mastering this legal framework is essential to protect your rights and secure your transactions. Our expertise in banking and financial law enables us to help you understand these complex regulations and defend your interests. Do not hesitate to contact our firm for a personalised analysis of your situation.
Sources
- Monetary and Financial Code, in particular Articles L. 133-1 et seq.
- Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market (PSD2)
- Order no. 2017-1252 of 9 August 2017 transposing Directive (EU) 2015/2366
- Proposal for a Regulation of the European Parliament and of the Council on payment services in the internal market (PSR1) - COM(2023) 367 final
- Proposal for a Directive of the European Parliament and of the Council on payment services and electronic money services in the internal market (PSD3) - COM(2023) 366 final
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