Definition

Let's start with a brief definition: a credit card is a magnetic card issued by a financial institution and used to carry out transactions. There are several types. To navigate the available options, let's focus on credit cards as a payment method AND as a network, along with their use.

Categories

First, let's take a look at the two main categories of credit cards:

1. Debit Card: This card allows both cash withdrawals and payments, whether online on an e-commerce site or at a local merchant.

   It is a payment card, usually with systematic authorization: before each transaction, the account balance is checked, and if sufficient, the transaction is authorized. There are also debit cards without systematic authorisation, where the authorisation request is random, a specificity in France due to the CB network, which we'll discuss later.

   Important: Transaction amounts with a debit card are debited daily, i.e., immediately, from the account of the cardholder. This is one of the main characteristics of this type of card.

2. Credit Card: This card also allows cash withdrawals and payments. There are two subcategories:

   • Deferred Debit Card: All operations the cardholder performs during a specified period (usually a month) are debited at a later date, not immediately (excluding cash withdrawals). Generally, the cardholder is not liable for interest.

   • Credit Card: As known in France, offering a revolving credit facility and the option to pay in instalments. There are various types, such as store-branded cards (issued by a retail brand like Décathlon or Amazon), allowing cash withdrawals and payments within a specific network, or co-branded cards accepted by all merchants.

   
   

Note: To recognise them, it's straightforward! Since 2016, with the application of Regulation (EU) No. 2015/751, credit cards bear the "DEBIT" label (for immediate debit cards). Credit cards, on the other hand, display "CREDIT" for deferred debit cards, for example, those allowing instalment payments or revolving credit.

There are two other card categories:

• Commercial Card: Also called a professional card, labeled "COMMERCIAL," with expenses charged to a company's account.

• Prepaid Card: Reserved for individuals, labeled "PREPAYE." This card allows access to a limited amount of money, such as gift cards.

And the term "carte bancaire" in all this? Well, it no longer exists as such. A "carte bleue" is actually a French Visa card. Does the CB logo not mean "carte bleue"? No, it doesn't. The CB logo actually stands for "carte bancaire" and appears on all cards issued by French banks, referring to the CB Banking Card Group, the market leader in France with 73.9 million CB cards in 2021 and over 14 billion transactions.

"With the European regulation, the merchant has the option to automatically preselect their preferred payment brand for each transaction — the one offering the most favourable conversion rate, the highest guarantee level, or the lowest fees. However, the customer must have the option to change this brand if they wish". - Loys Moulin, Director of Development at CB.

This brings us to the main networks available in France.

What is a Network or Scheme?

When a customer pays for online purchases with their card, they usually have the choice between CB, Visa, or Mastercard— the three main payment networks in France. The CB Banking Card Group is a French specificity, while Visa and Mastercard are the two international giants of credit cards.

What does this mean? It means that the selected network processes the transaction and applies network fees, i.e., commissions, to verify the client's solvency and ensure that online store owners are remunerated. The various networks intervene at the time of transaction validation.

It's worth noting that the vast majority of credit cards issued by a French bank are co-badged: in addition to the French CB network, they support an international network (usually Visa or Mastercard). Transaction fees for a purchase paid with a Visa card issued by a French bank will be the same as those for a CB card. However, if you sell internationally, be aware that these fees may be higher for cards issued abroad. In such cases, transaction fees for a purchase made with a Visa issued in Belgium, for example, will be charged at Visa Europe rates. And in the case of a purchase made with a Visa issued in Algeria, transactions will be billed at Visa International rates.

Now that introductions are made, and you know a bit more about the different types of credit cards, let's delve into the details of transaction pricing—an essential aspect of e-commerce.