I often find myself explaining the rules and restrictions of offering credit card payment on a website in France and today, after a client asked if I could send him something in writing on the subject, I decided it was time for a post.
French businesses—with their bank accounts in France—must first obtain a VAD contract (vente à distance) from their bank in order to accept credit card payments. Without this contract, which is the same contract that allows merchants to have credit card machines in their stores, the only online credit card payment solution available is PayPal.
In the last few years, it has become much easier to apply for and obtain this VAD contract, but there are some things to know.
1. They don’t give them to everyone. Banks will take a number of things into consideration when deciding whether or not to give you a contract, including:
- How long you’ve been in business.
- How much money is in your account and/or how large your company’s capital is.
- What the average purchase amount on your site is predicted to be.
- What you project in yearly online revenue.
2. It can take a while. Although I have clients who’ve obtained their contracts in under two months, I know others who’ve waited up to six. It depends on the bank, and on the banker. So keep this in mind when moving forward on your project – don’t wait until the last minute!
3. Like anything, these things are negotiable. When I initially investigated these questions years ago, the cost of these contracts was a fixed, one-time charge of around 250-350€. Recently I’ve heard of some banks implementing monthly recurring fees. If you don’t like the way your bank does things, maybe it’s time to change banks. It’s okay to shop around, and this is another reason to get a head start when getting into e-commerce in France.
4. A VAD contract is not a secure payment solution. Once you obtain the VAD contract, you then have your choice of payment solutions. Your bank likely has one that they’ll want you to use, but you are under no obligation to do so, as their fees will likely be higher on average than other offers out there. The cost of payment solutions are mostly based on a percentage of sales, but can also include monthly fees and/or a flat rate per transaction. Make sure and compare the offers carefully before deciding which one to use.
5. Integration is also a factor. The final step after you’ve obtained your VAD contract and chosen your secure payment solution, is getting everything up and running on your website. If you’re shop is running off a CMS (content management system) like WordPress or Prestashop, or off an online service like Shopify, then this means using an external module (plugin) to setup the payment gateway. So yes, making sure the options you want are available is an important part of planning. Don’t choose a secure payment solution if the plugin isn’t readily available for your CMS, or you may spend a lot of money on development (or on changing your CMS).
In an upcoming post, I’ll go over some of the integration solutions available for the common payment solutions used in France, and share with you a few of my experiences.
Have an experience to share or questions about the VAD contract? Please post them in the comments below!