The legal framework for bank transfers: the customer's rights and the bank's obligations

Today, bank transfers are an indispensable tool for individuals and businesses alike, making it easier to exchange money on a daily basis.

Whether it's paying rent, settling a supplier invoice or transferring funds to a relative, its apparent simplicity masks a precise legal framework.

Understanding the rights and obligations of each party, in particular the customer and the bank, is essential if you are to navigate these transactions with peace of mind.

This article provides a summary of the rules governing bank transfers in France and within the SEPA area, to help you understand your prerogatives and the responsibilities of financial institutions.

We will look at the different types of transfer, including instant transfers, execution times in working days, the impact of public holidays such as Easter or 1 April, and the role of European payment systems such as TARGET.

What is a bank transfer and what are the different types?

Before exploring the intricacies of its regulation, it is important to understand the nature of the bank transfer, the players involved and the main types of transfer that exist.

Legal nature of the transfer order and payment transaction

A bank transfer is legally divided into two distinct phases. The first phase, transfer order is the instruction given by the payer (the customer) to his payment service provider (usually his bank). This order is analysed as a mandate: the customer instructs his bank to transfer a specific sum of money from his account to the account of a beneficiary.

On the other hand, the transfer operation refers to the physical execution of the order. It involves a set of accounting entries: debiting the originator's account and crediting the beneficiary's account. It is through this scriptural process that the funds are actually transferred.

Transfer actors

Several parties may be involved in a transfer:

• Le client (or payer): the person who initiates the transfer.
• Le beneficiary the person receiving the funds.
• Le the originator's payment service provider (PSP) the bank holding the account to be debited.
• Le Beneficiary's PSP the bank holding the account to be credited.

In certain cases, in particular for complex or international transfers, one or more Intermediate PSP can intervene to channel the funds.

The main types of bank transfer

There are several types of transfer, each meeting specific needs:

• Internal transfer : Transfer of funds between two accounts held by the same person at the same bank. This type of transfer is often instantaneous and free of charge.
• External transfer : Transfer of funds to a third party's account, whether at the same bank or a different bank. Processing an external transfer may take a little longer.
• One-off or occasional transfers : Single payment order for a specific transaction, such as a purchase.
• Standing order (or programmed transfer) : Recurring payment order (monthly, quarterly, etc.) for a fixed amount to the same beneficiary (e.g. rent payment, salary payment). You can change or suspend a standing order via your online customer area or by contacting your branch. It's easy to set up.
• SEPA (Single Euro Payments Area) transfer : Transfer in euros between bank accounts located in the countries of the SEPA zone (which includes the countries of the European Union, the post-Brexit United Kingdom under certain conditions, and a few other countries). This is the most common type of transfer for national and cross-border transactions in Europe.
• Standard SEPA transfer : Turnaround time is generally one working day. This service is standard.
• Instant SEPA Credit Transfer (or Instant Payment) : Allows funds to be transferred in a matter of seconds (real time, often less than 10 seconds), 24 hours a day, 7 days a week, including weekends and public holidays. Banks are increasingly offering this service, sometimes with a lower upper limit than the standard SEPA transfer. This type of transfer is very useful for urgent payments.
• International transfer (or transfer outside the SEPA zone) : Transfer made to a country outside the SEPA zone or in a currency other than the euro. These transfers may incur higher charges and take longer to process. Specific information such as the SWIFT/BIC code of the beneficiary's bank is required. A specific document is often required.
• Commercial transfer on due date (VCOM) : A dematerialised means of payment, mainly used by companies for their supplier payments, with a future execution date.

Regulatory framework: CMF, DSP2 and the Single Euro Payments Area (SEPA)

The legal framework for bank transfers in France is based primarily on the French Monetary and Financial Code (CMF), which has been largely influenced by European directives, in particular the Payment Services Directive 2 (PSD2). The aim of this directive and the SEPA regulation is to harmonise the rules within the European Union and the European Economic Area, enhance user protection and promote competition in payment methods.

Obligations of payment service providers

As payment service providers, banks are subject to a number of obligations. In particular, they must provide their customers with clear and comprehensive information before carrying out a transfer (on execution times, charges, and any exchange rates for international transfers) and after the transfer has been carried out. This transparency is a cornerstone of the regulations. In fact, SEPA credit transfers are a basic banking service. The Fédération Bancaire Française (FBF) and the Banque de France play a role in disseminating this information and setting standards. The public information service can also be a resource.

Strong customer authentication

To ensure the security of online transactions, particularly those carried out via the Internet or a mobile application, PSD2 has introduced the requirement for a strong customer authentication. This means that to initiate a transfer, customers must identify themselves using at least two of the following three categories:

• Something that only the user knows (a password, a PIN code).
• Something that only the user has (their mobile phone to receive a unique code, a smart card).
• Something inherent in the user (a fingerprint, facial recognition).

This measure is designed to significantly reduce the risk of fraud when making a transfer from a customer area. It is sometimes possible to change the access code.

The SEPA credit transfer: harmonisation within the euro zone and beyond

Le SEPA (Single Euro Payments Area)The Single Euro Payments Area (SEPA) was a major step forward. Its aim is to enable individuals and businesses to make and receive payments in euros, both nationally and between member countries of the SEPA zone, under the same conditions, with the same ease and security. The SEPA zone includes the countries of the European Union, as well as other European countries such as Norway, Iceland, Liechtenstein, Switzerland, Monaco, San Marino, Andorra, the Vatican and, under certain conditions, the United Kingdom. The European Payments Council (EPC) is the European banking industry's coordination and decision-making body for payments. Thanks to SEPA, a national credit transfer in France and a credit transfer to Belgium or Germany are treated in the same way. This harmonisation benefits the entire euro zone.

Executing a transfer order: deadlines, working days and payment systems

It is essential to understand the mechanisms involved in executing a transfer, in particular the time taken and the impact of non-working days.

Processing times and working days: a timetable to be respected

The time it takes for a transfer to reach the beneficiary's account depends on the type of transfer and the banks involved.

• For a standard SEPA transferThe funds are generally credited to the beneficiary's account within one month. working day bank day following the date on which the transfer order is executed by the originator's bank. A business day corresponds to the days when banks are open and operational to process transactions, generally excluding Saturdays, Sundays and national holidays (such as Easter Monday, 1 May, Ascension Thursday, Good Friday in certain regions/countries, e.g. Belgium). The precise calendar of days on which interbank payment systems are closed (such as TARGET2, see below) is set each year and can have an impact on the time taken. For example, a transfer initiated on a Friday evening or during a weekend will not be processed until the next working day, often the following Monday, unless that Monday is a public holiday (as may be the case in April or January). A transaction scheduled for a specific date must take account of this calendar.
• Le instant SEPA transferas its name suggests, is designed to be processed in a matter of seconds (real time), 24 hours a day, 7 days a week, including weekends and public holidays. More and more banks are offering this service, although a maximum amount may apply. This type of transfer is very useful for urgent payments.
• For a international transfer outside the SEPA zoneHowever, depending on the country of destination, the currency and the intermediary banks involved, lead times can be longer, ranging from a few days to more than a week.

It is important to note that the cut-off time for receipt of transfer orders by the bank can also influence the debit date and the start of the execution time. A transfer order received after this time on a Thursday, for example, may not be processed until Friday. Banking institutions remain operational according to these rules. The last period of the year may also see larger flows.

The role of payment systems (TARGET2) for large flows

For large-value transfers in euros, particularly between banks within the European Union, the TARGET2 (Trans-European Automated Real-time Gross settlement Express Transfer system) plays a central role. Managed by the European Central Bank (ECB) and national central banks (such as the Banque de France), TARGET2 enables payments to be settled irrevocably in real time. The system operates on working days according to a precise timetable, and its closure (for example, on 1 January, Good Friday, Easter Monday, 1 May, Christmas and 26 December) has an impact on all the payment flows passing through it. The last period of the year, particularly at the end of December, can also see adjustments in operating hours. This system is a pillar of the Single Payment Area.

Internal and external transfers: differences in treatment

A internal transferbetween two accounts within the same bank, is generally processed almost instantaneously, as it does not need to go through an interbank clearing system. On the other hand, a external transfer to another bank, even if it is a national transfer, passes through these systems, which explains the delay of one working day for a standard SEPA transfer.

Liability of the bank in executing a transfer

The originator's bank plays a key role in ensuring that the transfer is carried out correctly. It can be held liable at several levels.

Verification of credentials/identity and IBAN (International Bank Account Number)

Before executing a transfer order, the bank must ensure that it is indeed from the account holder (whether it is a current account or a business account) or from a duly authorised person. It must also check that there are no apparent anomalies in the order.

As regards the identity of the beneficiary, the bank must execute the transfer on the basis of the unique identifier provided by the originator, which is now the IBAN (International Bank Account Number). If the originator provides an incorrect IBAN, the bank is generally not liable for the incorrect execution of the transfer, even if other information (such as the name of the beneficiary) was also provided. However, the bank must do all it can to help recover the funds. It is therefore essential to check this account number carefully before making a transfer.

The bank's duty of care

In addition to formal checks, banks are subject to a general duty of vigilance. They must be alert to transactions that appear to be manifestly unusual in relation to their customer's commercial practices or that present suspicious characteristics that could suggest fraud. This obligation is particularly important in the fight against fraudulent transfer and scams. Visit banking vigilance also extends to the detection of possible money laundering or terrorist financing operations.

Customer rights in the event of error, fraud or blocked transfers

When a customer is the victim of an unauthorised transfer (for example, in the event of fraud on their bank account) or a transaction that has been poorly executed, the regulations give them important rights.

Immediate refund in the event of an unauthorised transaction

In the event of an unauthorised payment transaction reported by the customer, article L. 133-18 of the French Monetary and Financial Code requires the payer's bank to immediately reimburse the amount of the transaction. The account must be restored to the state it would have been in had the unauthorised transaction not taken place. This reimbursement must be made without delay and at the latest by the end of the first working day following notification of the dispute by the customer, unless the bank has good reason to suspect fraud on the part of the customer and informs the Banque de France. Unless otherwise stipulated in the contract, if the beneficiary's bank has already credited its customer and must return the funds to the payer's bank as a result of fraud, it may not reverse the transaction on its beneficiary customer's account without the customer's authorisation.

Time limits and procedures for disputing a bank transfer

To benefit from these protections, customers must act quickly. They have a period of 13 months from the debit date to report an unauthorised or incorrectly executed transfer to your bank. This period is reduced to 8 weeks from the date of debit to dispute a direct debit that has been authorised by the payer, but the amount debited exceeds the amount that could reasonably have been expected. It is therefore essential to monitor your account statements regularly so that you can contesting a bank transfer on time. If a transfer is blocked or suspended without explanation, you should complain to the bank. Transfers in excess of the authorised limit can also be a source of error.

Charges for bank transfers

While many standard SEPA transfers are free of charge, particularly when made online via the customer area, charges may apply in certain situations.

Charges for different types of transfer

Charges for transfers vary considerably from one bank to another, depending on the type of transfer:

• Standard SEPA transfers : They are often free if initiated online. Fees may be charged for transfer orders given in a branch or over the counter.
• Instant SEPA transfers : Some banks offer them free of charge, while others charge a fee (usually around €1 per transaction).
• International transfers outside the SEPA zone : These transfers are almost always subject to a charge. The charges may include an issuing commission, an exchange commission, and potentially charges levied by the correspondent banks. The amount can be high.
• Transfers from a business account (pro account) : Pricing conditions may differ from those for retail accounts. The account agreement specifies the applicable charges. It is useful to note the page where this information is available.

It is a good idea to consult your bank's price brochure (often available on its website) or ask your adviser for the exact charges for a specific transfer before making it. Charges must be clearly defined.

Best practices for making and securing transfers

While the law protects users, caution is still the best way to avoid problems. Here are a few tips for making a bank transfer in complete safety:

• Protect your personal and banking data Never give out your online banking identifiers, passwords or codes received by text message (often via a pre-registered telephone number). Beware of suspicious emails or phone calls asking for this information (phishing).
• Check the beneficiary's details carefully Before validating a transfer, make sure that the IBAN and the name of the beneficiary are correct. A simple error can result in the funds being sent to the wrong recipient. For a major purchase, double-check.
• Always use strong authentication offered by your bank to validate your transactions online from your customer area or your mobile application.
• Monitor your accounts regularly Check your bank statements frequently to detect any suspicious transactions and react immediately.
• If in doubt about a delayed transfer or does not appear to have reached its destination, contact your bank quickly for clarification. It is possible to ask for a transfer order to be changed or cancelled if it has not yet been executed, but the conditions vary.

Understanding this legal framework is an asset. If you have a dispute with your bank about a transfer, or if you are the victim of fraud, the assistance of a professional can be invaluable. It is important to provide any useful documents when making a complaint. It must be possible to trace a transfer.

For an in-depth analysis of your situation and tailored advice, please contact our team atlawyers specialising in banking law.

Frequently asked questions