Large enterprises are facing challenges when looking for the right payment mix for the European market. Significant expertise and resources are required to implement payment methods that meet local customer needs and improve acceptance rates. Merchants need to understand both technical specifics and regulations at the same time.
During a webinar hosted by the Merchant Risk Council (MRC), Payplug, Cartes Bancaires and PPRO provided exclusive insights on how to optimise payment performance in Europe, with a specific focus on France, the leading card payment market in the eurozone.
Here is the summary of their presentation!
French e-commerce market overview
France is the largest e-commerce market in the European Union and the 2nd largest in continental Europe, right after the United Kingdom. Its annual turnover amounted to nearly 160 billion euros in 2023, +10.5% compared with 20221.
Some key figures to better understand French buyers’ behaviour:
- In 2022, they made 16% of their purchases online, an increase of +23% within three years2.
- The amount spent by the average French online shopper is 2,300 euros per year and is expected to rise to 3,100 euros by 20272.
- 17% of all French online purchases come from e-commerce sites based in other countries2.
You can find more data on PPRO website!
When it comes to payment trends, the European market is still fragmented, which is why merchants tend to use a higher number of payment gateways and processors (3.8) than in the U.S. (3.5) for example3. It enables them to meet customer expectations, maximise flexibility and payment authorisation, while reducing interchange fees in most countries.
In France, credit cards are the number 1 payment method online, followed by e-wallets such as PayPal, Apple Pay and Google Pay.
Since 2019, the Payment Services Directive 2 (PSD2) has introduced a paradigm shift in Europe:
- All transactions must be authenticated, except for exemption cases leading to frictionless payments;
- The decision of applying strong or frictionless authentication lays on issuers side.
CB, the biggest domestic scheme in Europe
Founded in 1984, GIE Cartes Bancaires (CB) is the leading card network in France with 85% of market share among card payments4. They have issued 77 million co-badged cards with international schemes such as Visa and Mastercard, and represent 20% of the total amount of card payments in the Euro zone5.
Not only is CB widely popular, but it’s also an attractive scheme that maximises revenue through various levers:
- Enhanced payment conversion: CB frictionless acceptance rate is on average 8 points higher than frictionless acceptance rate on international schemes. The authorisation rate on CIT authorisation requests is 94.4% on average4. How? By working closely with issuers to optimise fraud detection, thus achieving the lowest fraud rate on card payments in France6.
- Affordable services: as a non-profit organisation, CB are making their services as accessible as possible. The best significant example are the Card Scheme Fees, which are the lowest on the market (vs international card scheme fees).
- Community scoring tools: co-constructed by issuers, acquirers and merchants. This "CB score" is vehiculated through transactional exchange to issuers in order to facilitate their risk assessment and transactions approval.
- Chargeback rules: protect merchants from commercial disputes and promote the use of 3-D Secure.
CB brings a full set of benefits to improve your performance on the French market. You can easily access it by choosing the right partners who have established direct connections to this network.
4 tips to optimise your payment performance in France
1. Choose local acquiring
French payment ecosystem is running on a specific technical protocol, different from the international card schemes.
As the market has globalised, networks have set up interoperability between the French protocol and international ones. But using local rails and protocol remains the best option to optimise performance.
Some local acquirers, such as Payplug, are natively connected to the French local protocol and ecosystem, enabling native improved payment conversion. Merchants who have migrated from international acquiring to our platform have increased their acceptance rate by to 2 points on average7.
2. Adjust your BIN routing
As mentioned above, CB brings several benefits when addressing the French market: fraud prevention, increased performance and reduced costs.
How to maximise CB routing on French transactions while matching scheme rules (which stipulate that customers must be able to decide on which card network their transaction shall be processed)?
- Identify BINs as your customers enter their card details, to make sure you can take action on all co-branded cards. Payment providers or orchestrators like PPRO provide tools to detect BINs.
- Apply scheme rules to your advantage: leaving the choice to your visitors doesn’t mean you can’t set up a “by default logic”. Pre-populate your preferred card brand on the checkout page, but allow payers to switch to another preferred scheme.
On a broader scale, your PSP, your acquirer and your orchestration platform can help you define your routing rules according to the benefits of each scheme in your target markets.
3. Manage fraud to build your frictionless strategy
A low fraud rate is key to maximise acceptance of frictionless requests by French issuers. More frictionless reduces both 3-D Secure declines and abandonment at the payment stage, while improving your UX and by extent consumer retention.
Keep in mind that fraud rates are calculated at the issuer level: if you’re using multiple acquirers, the issuer will consider your total traffic and not only the one sent through each acquirer individually to calculate your "issuer fraud rate". Therefore, you must consider your fraud management globally.
Fraud management is a central point to consider when aiming to improve your performance on the French market, simplify user experience, and save significant costs!
The average fraud rate for CB transactions in France is 6 basis points lower than other card schemes⁷.
4. Build relationships with issuers and schemes
Building relationships with French issuers and local schemes, directly or through your acquirer, is the best way to get insights on your payment performance under PSD2, also to have access to private programs.
At Payplug, we have a privileged connection to CB and Groupe BPCE, leading card issuer in continental Europe.
We can thus help our merchants optimise their payment performance globally by giving them access to tailored issuer insights that enable them to control their fraud rates better.
Dedicated programs developed with issuers and schemes are also more easily accessible:
- Safe'R by CB, a service to improve frictionless acceptance by French issuers globally up to 95% for transactions under €2508.
- Fastpass, a unique connection protocol guaranteeing up to 98% acceptance of merchants frictionless requests on cards issued by Groupe BPCE (20% of French traffic)9.
Conclusion
As we’ve seen, France is a high-potential market, and may not seem complex to address for new entrants. However, when giving it a closer expert look, it offers several performance optimisation opportunities that must be seized.
Here are the key takeaways to keep in mind when building your payment strategy for this market:
- Provide adapted payment methods, especially credit cards and e-wallets;
- Prioritise local payment partners and schemes to improve your performance and reduce your costs;
- Manage fraud effectively to boost frictionless payments.
Local knowledge and connection provided by your orchestrator, PSP or acquirer is essential to provide a truly seamless adapted experience. Contact our team to get personalised advice on how to perform in the French and European markets!
Sources: 1Fevad, 2024 ; 2PPRO, 2024 ; 32023 Global Ecommerce Payments and Fraud Report ; 4Statista, 2023 ; 5CB data, 2023 ; 6Banque de France, 2023 ; 7Payplug data, 2024 ; 8CB Observatory, 2023 ; 9Payplug data, Q4 2023
