The payment card has become an indispensable tool in economic life, simplifying day-to-day transactions for individuals and businesses alike. Behind its ease of use, however, lies a dense legal framework that defines the rights and obligations of each player: the cardholder, the merchant who accepts it, and the bank that issues it. This contractual and regulatory universe can quickly become complex, particularly in the event of a dispute or fraud. This article provides an overview of the fundamental principles governing payment cards under French law, and will serve as a guide to understanding the mechanisms that we detail in more specific publications. In the event of difficulties, particularly in the case of fraud, the assistance of a lawyer may prove decisive in asserting your rights; our expertise in banking fraud law is available to analyse your situation.
What is a payment card? Definition and development
Origins and benefits of payment cards
Born of the computerisation of banking services, payment cards first saw the light of day in the United States before becoming widespread in Europe. Their main advantage is that they make transactions more secure by eliminating the need to handle cash. For the merchant, they offer a payment guarantee, often provided by the issuing institution up to a certain amount, which considerably reduces the risk of non-payment. For the cardholder, they represent a practical and secure means of payment, with features such as the confidential code.
Distinction between payment, credit and withdrawal cards
Although often confused in everyday language, these three concepts cover distinct legal realities. A payment card is used to pay for purchases, the amount of which is debited immediately or deferred from a deposit account. A credit card is associated with a cash reserve, often a revolving credit facility, which the cardholder can use. Finally, the cash withdrawal card, as its name suggests, can only be used to withdraw cash from ATMs. In practice, many cards now combine these different functions.
The legal framework in national and European law
In France, the payment card system is mainly governed by the Monetary and Financial Code. This is a minimal framework that leaves plenty of room for contractual freedom, even if contracts are in practice contracts of adhesion. Legislation has been progressively strengthened to protect users, notably with the law of 15 November 2001 on daily security, which improved the handling of fraud. European law has also played a major role, through several directives aimed at harmonising payment services within the Union. For a broader understanding of these regulations, it is useful to refer to the legal framework for payment serviceswhich includes the use of cards.
The diversity of payment cards and their functions
The different forms: bank, credit, private
There are three main categories of card. Bank cards (such as the "CB") are issued by credit institutions, generally members of a network such as the Groupement des Cartes Bancaires. Charge cards are managed by specialised financial companies that pay the supplier and are then reimbursed by the cardholder. Finally, proprietary cards are issued by retail chains to build customer loyalty and can only be used within their network.
Multiple functions: withdrawal, payment, credit and ancillary services
Today's cards are rarely single-purpose. Most bankcards can be used for both cash withdrawals and payments. Many include a credit function. In addition to these basic functions, there are more and more ancillary services, particularly for top-of-the-range cards: insurance (travel, lost luggage), assistance (medical, legal) and loyalty programmes.
The triangular mechanism of payment cards: issuer, holder, supplier
Payment cards operate on the basis of a three-way relationship. The issuer (the bank or financial institution) provides the card and guarantees payments. The cardholder (the customer) uses the card to make payments. The supplier (the merchant or service provider) accepts the card as a means of payment. This mechanism is structured by two separate contracts: one between the issuer and the cardholder, the other between the issuer and the supplier. These contractual relationships bind the banker's general liabilitywhich must ensure that the system works properly.
Contractual relations and the key obligations of the parties involved
Relationship between the issuer and the cardholder
The "cardholder contract" binds the bank and its customer. It defines the conditions for using the card, the payment and withdrawal limits, and the responsibilities of each party. The issuer's main obligation is to honour valid payment orders. Cardholders, on the other hand, undertake to keep their PIN confidential, to use the card in accordance with the contract and to ensure that there are sufficient funds in their account. To find out more, read our article on the detailed rights and obligations between issuer and cardholder.
Relationship between issuer and supplier (merchant)
The "acceptance contract" allows merchants to join a card payment network. In return for a commission, the issuer undertakes to pay the merchant for the transactions carried out, provided that the merchant complies with the security procedures: verification of the card, request for authorisation for large amounts, etc. The supplier is obliged to accept as payment the cards of the network to which it has subscribed. For more details, please read our publication on the contractual relationship between the issuer and the merchant accepting the card.
Making a card payment: order and irrevocability
The use of a card by its holder to pay for a purchase constitutes a payment order given to his bank for the benefit of the merchant. A fundamental principle, enshrined in the French Monetary and Financial Code, is the irrevocability of this order. Once the transaction has been authorised (by entering the secret code or validating online), the cardholder can no longer cancel it. This rule is essential to guarantee the security of transactions for the merchant, who is thus assured of being paid. The subtleties of this mechanism are explored in our article on the procedures for issuing card payment orders and their irrevocability.
Preventing and managing payment card fraud
In the event of loss, theft or fraudulent use of their card, cardholders must immediately stop payment at their bank. The cardholder's financial liability for transactions carried out prior to the stop payment is limited to a maximum of €50, unless the cardholder has been grossly negligent. The law particularly protects consumers in the event of remote fraud: if payments are made online without using the card physically (for example, after the numbers have been stolen), the cardholder will be reimbursed in full. However, the notion of "gross negligence" is open to interpretation. Communicating personal data in response to a phishing e-mail containing obvious signs of fraud may be qualified as such by the courts, leaving the losses to be borne by the customer. Visit legal system and penalties for bankcard fraud are complex subjects that deserve special attention.
Why is legal advice essential when it comes to payment cards?
Payment card disputes are a frequent occurrence. Whether a merchant is faced with the cancellation of a payment guarantee by the bank, or a private individual is the victim of complex fraud, the stakes can be high. The contracts governing these relationships are often contracts of adhesion, leaving little room for negotiation. What's more, the burden of proof in fraud cases, particularly in determining whether or not there has been gross negligence, is an area where legal expertise makes all the difference. A lawyer with expertise in banking law will be able to analyse liabilities, interpret contracts and effectively defend your interests against financial institutions.
The complexity of the rules applicable to payment cards and the financial consequences of a dispute often make legal assistance essential. For an in-depth analysis of your situation and tailored advice, contact our team of lawyers.
Frequently asked questions
What is the main difference between a payment card and a credit card?
A payment card is directly linked to a deposit account: spending is debited from this account. A credit card is associated with a revolving credit reserve that is independent of the deposit account balance.
Can a merchant refuse a card payment?
In principle, a merchant affiliated to a card network is obliged to accept them. However, they may set a minimum transaction amount, provided that this is clearly displayed for their customers.
What does the principle of irrevocability of card payments mean?
This means that once a payment order has been given (by entering the PIN, for example), the cardholder can no longer cancel it. This rule protects the merchant by guaranteeing payment.
What is my financial responsibility if my card is stolen?
Once you have stopped payment, you are no longer liable for fraudulent transactions. For transactions carried out before the stop payment was made, your liability is legally limited to €50, unless the bank can prove gross negligence on your part.
Am I liable for fraudulent Internet payments if I still have my card?
No. The law states that in the case of a distance payment without physical use of the card, you are not liable. The bank must reimburse you in full, without delay, any sums debited fraudulently.
What can be considered "gross negligence" in the case of fraud?
Gross negligence is assessed on a case-by-case basis. Providing personal data in response to a phishing e-mail containing obvious signs of fraud (spelling mistakes, suspect address) is often considered gross negligence by the courts.
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