Payments are an everyday routine matter. The past ten years have brought many changes in the world of payments (Internet, mobile). Instruments have been dematerialised and automated. But what do we understand by means of payment? According to Régis Bouyala, means of payment are “transaction media made available to economic agents [...] to pay the price of a product or service or to settle a debt.” (1)
There are two main categories: fiduciary currency and bank money. Fiduciary currency is represented by cash, banknotes and coins. Bank money gives rise to an entry in an account via a cheque, transfer or bank card. Bank cards, which appeared in Belgium in the late 1970s, are particularly useful for face-to-face payments because they are easy to use, widely accepted and accompanied by a wide range of services. A third category was created recently, namely electronic money. This in fact corresponds to issuance of the prepaid electronic purse, used for payments which are initiated, processed and received electronically (by means of the chip).
Electronic money is located at the intersection of several spheres: the economy, the banking sector, information technology and networks. The French term ‘monétique’ is a contraction of the words moné(taire) [monetary] and (informa)tique [information technology]. It has been in use since the 1980s. It concerns “all the electronic, IT and telematic techniques which enable transactions and bank transfers to be effected (bank cards, electronic transfers, etc.)”. (2)
The means of payment most commonly used by the majority of Europeans is the bank card. However, its usage varies greatly from one country to another. In 2007, Europeans effected an average of 55 payments a year by card: for Finns, the figure was 153, for Danes 160 while for Poles it was just over 10. In Europe, 95 % of (national) domestic payments are effected by card. Payments in Benelux are mostly made by debit card (Maestro), while in the United Kingdom it is credit cards (used as deferred debit cards) that are most commonly used.
Launched in 2002, the SEPA (Single Euro Payments Area) project is intended for European payments in bank money, by analogy with the single cash payments area where euros are in circulation. Thirty-one countries are taking part, namely the twenty-seven European Union countries plus Iceland, Norway, Liechtenstein and Switzerland. Cross-border transfers are the most numerous transactions. Bancontact/Mister Cash are the cards most commonly used for domestic payments.
The first payment cards took the form of a plastic card with embossed inscriptions. Later, computerisation made it possible to equip cards with a magnetic strip. At that time, electronic transactions were processed via the telephone networks. However, security remained a concern. It was addressed by the introduction of cards with an electronic chip. EMV is an international chip card standard launched in 1997 by the international networks Europay, Mastercard and Visa (hence the acronym EMV).
Modern bank cards display various security features, arranged differently depending on the card. In particular, on the front of the card there is the card number (ending in the Luhn algorithm), the IBAN (International Bank Account Number) and the electronic chip. On the back, security features include the magnetic strip and the signature.
Cards offer two services: payments and withdrawals. They are always used in conjunction with an account from which the amounts corresponding to the transactions are debited. The debit card is a magnetic card permitting the immediate debiting of an amount from a bank account. Conversely, credit card payments are not debited to the account until the end of the month.
There are four main players involved in card payments: the card holder, the holder’s bank (often the bank which issued the card), the acceptor (the party receiving the payment) and the acquiring bank (which makes the transactions available to the issuing bank).
In the world of electronic money, there are two types of financial transactions. Domestic transactions are those effected within a country by holders of cards issued by financial institutions in that country. International transactions can be divided into two categories: transactions effected within a country by holders of cards issued by foreign banks, or transactions effected abroad by holders of cards issued by banks of the country of origin. The transactions are then effected between the banks via international networks such as Visa or MasterCard.
BOUYALA, Régis, Le monde des paiements, Paris, 2005, Revue Banque Edition, coll. Techniques bancaires.
BOUYALA, Régis, Les paiements à l’heure de l’Europe et de l’e-paiement, Paris, 2009, Revue Banque Edition, coll. Les essentiels de la banque et la finance.
BRYON, Marie et VAN OVERSTRAETEN, Christophe, Des cartes et des terminaux. 25 ans de paiements électroniques en Belgique, Banksys, 2004.
HALLEPEE, Didier, L’univers de la monétique : histoire, fonctionnement et persectives, Paris, 2009, Domptin, coll. Arc-en-Ciel. Economie.
HALLEPEE, Didier, SEPA : l’espace des paiements en euro, Paris, 2009, Domptin, coll. Arc-en-Ciel. Economie.
SHERIF, Mostafa Hashem, Paiements électroniques sécurisés, Paris, 2007, Presse polytechniques et universitaires romandes et GET, coll. Technique et scientifique des télécommunications.
(1) BOUYALA, Régis, Le monde des paiements, Paris, 2005, Revue Banque Edition, coll. Techniques bancaires, p. 21.
(2) SHERIF, Mostafa Hashem, Paiements électroniques sécurisés, Paris, 2007, Presse polytechniques et universitaires romandes et GET, p. 2