www.adyen.com Carte Bancaire and the French acquiring landscape Carte Bancaire

www.adyen.com Carte Bancaire and the French acquiring landscape Carte Bancaire is the most widely used payment method in France. In 2014, more than 94% of the French population above 15 years of age had a “Carte Bancaire” card, and in 2015, there were 63.2 million “Carte Bancaire” issued cards, representing 1.4 cards in average per person. The split of French–issued cards is as follows: • Around 95% are co–branded Carte Bancaire & MasterCard or Carte Bancaire & Visa • Around 4% are “MasterCard only” or “Visa only” • Around 1% are “Carte Bancaire only” This means that 95% of French cards can be processed on the local Carte Bancaire network, as well as on the international networks (Visa and MasterCard). %HQHȴWVRIORFDOFDUGSURFHVVLQJLQ)UDQFH Processing French–issued cards via the local (i.e. Carte Bancaire) QHWZRUNKDVVHYHUDONH\EHQHȴWV7KHPRVWLPSRUWDQWEHQHȴWLV WKDWORFDODFTXLULQJLQ)UDQFHH΍HFWLYHO\LQFUHDVHVWKHDXWKRUL]D- tion rate due to a complex issuing network. The following graph GHPRQVWUDWHVWKLVE\FRPSDULQJWKHDXWKRUL]DWLRQUDWHRQ)UHQFK cards of all of our merchants via cross–border acquiring (in green) and Carte Bancaire (in blue). In fact, switching from international acquiring to local acquiring can generate an increase in the autho- UL]DWLRQUDWHIURPWRGHSHQGLQJRQWKHPHUFKDQW $XWKRUL]DWLRQUDWH )UHQFKȂLVVXHGFDUGV 1RWH 7KHDERYHJUDSKVKRZVDVOLJKWO\ODUJHUGL΍HUHQFHLQDXWKR- UL]DWLRQUDWHVWKDQPRVWPHUFKDQWVZLOOH[SHULHQFHLIWKH\VKLIWWR ORFDODFTXLULQJ7KLVLVGXHWRWKHIDFWWKDWWKHPHUFKDQWVFXUUHQWO\ XVLQJFURVVȂERUGHUDFTXLULQJDUHQRWWKHVDPHDVWKHRQHVXVLQJ GRPHVWLFDFTXLULQJ ΖQ DGGLWLRQ WR KLJKHU DXWKRUL]DWLRQ UDWHV ORFDO SURFHVVLQJ enables merchants to process the 1% of “Carte Bancaire only” cards, and last but not least, being able to process a card on two networks (local or international) gives merchants increased agility and stability. 7KHXOWLPDWHDFTXLULQJVHWXS  /RFDODQGFURVVȂERUGHU While local card processing in France delivers better results for WKH DERYHȂPHQWLRQHG UHDVRQV WKH PRVW H΍HFWLYH VHWXS LV D 70% 75% 80% 85% 90% Cross-border Acquiring Domestic Acquiring Jun 15 May 15 Apr 15 Feb 15 Feb 15 Jan 15 Cross-border Acquiring Domestic Acquiring France Acquiring Guide July 2015 www.adyen.com dynamic combination of local and cross–border acquiring. This VHWXSGHOLYHUVWKHIROORZLQJEHQHȴWV %DFNȂXSURXWLQJ Co–branded French cards allow us to have two acquiring routes and build a back–up routing functionality. When incidents occur on WKHSULPDU\URXWH &DUWH%DQFDLUHIRULQVWDQFH WUDɝFLVDXWRPDW- ically routed through the back–up route (international acquiring). Retry The retry functionality makes it possible to automatically retry certain Refusals via the back–up Acquirer (whether international acquiring or Carte Bancaire), without the merchant or shopper needing to initiate a new transaction. This functionality improves DXWKRUL]DWLRQUDWHVDQGWKHVKRSSHUH[SHULHQFHDWWKHVDPHWLPH 6PDUWȂURXWLQJ The objective for merchants that combine local and cross–border DFTXLULQJLVQRZWRȴQGWKHRSWLPDOPL[DQGG\QDPLFDOO\URXWH BINs to the acquirer that performs the best (whether Carte Bancaire or international acquiring). Adyen performed A/B testing on a number of merchants, in which RI)UHQFKWUDɝFZDVURXWHGYLDLQWHUQDWLRQDODFTXLULQJDQG YLD&DUWH%DQFDLUHHQDEOLQJXVWRFRPSDUHDXWKRUL]DWLRQUDWHV on a BIN level. Results demonstrated that although Carte Bancaire KDVEHWWHUDXWKRUL]DWLRQUDWHVRQDYHUDJHLQWHUQDWLRQDODFTXLULQJ actually performs better on the BINs of some French issuers. Based on the results, we developed a new feature enabling merchants to dynamically route dual–branded cards via Carte Bancaire or via international acquiring. The optimal route is GHFLGHGEDVHGRQFRQWLQXRXVDQDO\VLVRQ%Ζ1OHYHODQGȵDJJLQJ FRQȴJXUDWLRQV 5HODWHGLQIRUPDWLRQ &DUWH%DQFDLUHFKDUJHEDFNV The scheme Carte Bancaire does not consider commercial disputes as an interbank issue, meaning, there are no charge- backs for commercial reasons such as non–delivery of products or services, defective merchandise, goods not as described, and so on. Therefore, commercial disputes must be resolved directly between the merchant and the shopper. 99.9% of the chargebacks received by Adyen are issued with the same reason code: “45: Disputed transaction” (i.e. fraud). However, enabling Dynamic 3D Secure resolves most of the chargebacks. Since June 1st 2015, the fee for fraudulent chargebacks via Carte Bancaire is €7.50. This is cheaper than the equivalent scheme fees RIȜIRU9LVDIUDXGXOHQWFKDUJHEDFNV H΍HFWLYHVLQFH2FWREHU 2014) and €15 for MasterCard chargebacks (from August 2015). )UHQFKEORFNHGFDUGV As a direct member of Carte Bancaire scheme, Adyen now receives the referral list of all French blocked cards on a daily basis. This is a unique feature for the French market and has allowed Adyen to implement a new risk check: “Carte Bancaire Scheme Blocked Cards referral list”. By putting a score of 100 on this new risk check, transactions issued from Carte Bancaire—blocked cards will be refused by ULVNEHIRUHEHLQJVHQWWRWKHQHWZRUN7KHNH\EHQHȴWLVWKDWE\ stopping transactions that would be refused by the networks DQ\ZD\ DV ZHOO DV XQQHFHVVDU\ UHWULHV  DXWKRUL]DWLRQ UDWHV increase. This results in an upward spiral—the higher authori- ]DWLRQUDWHWKHOHVVWKHLVVXHUUHIXVHVIXUWKHULQFUHDVLQJWKH DXWKRUL]DWLRQUDWHΖQIDFWZHHVWLPDWHWKDWWKLVULVNFKHFNZLOO GHOLYHU DSSUR[LPDWHO\ D  DXWKRUL]DWLRQ UDWH LQFUHDVH RQ )UHQFKWUDɝF ΖQDGGLWLRQWRWKLVRWKHUEHQHȴWVRIWKHULVNFKHFNLQFOXGH • Avoiding unnecessary costs from sending bad traffic to Carte Bancaire. • More information received on the reasons for refused transac- tions. This means that instead of receiving the code “05: Do not honor”, as previously occurred in most cases, these transac- tions would be refused by RevenueProtect, the Adyen risk tool. 0HUFKDQWDSSOLFDWLRQUHTXLUHPHQWVIRU&DUWH%DQFDLUH Merchants do not need to have a French entity to process French cards via Carte Bancaire, but a SEPA entity is required. Merchants with a French entity will get their application within 2 working days and merchants with a SEPA entity within 5 to 8 working days. $G\HQDVD&DUWH%DQFDLUHPHPEHU $G\HQ LV DQ RɝFLDO PHPEHU RI WKH &DUWH %DQFDLUH VFKHPH Through participating in every member forum and meeting, Adyen stays up–to–date with all scheme developments, and is DEOHWRXVHWKLVNQRZOHGJHIRUWKHEHQHȴWRIRXUPHUFKDQWV &RQFOXVLRQ Adyen has a unique product in France, available for international merchants with a EU entity. By using Adyen’s multi–acquirer solution, merchants will improve revenue through increased DXWKRUL]DWLRQ UDWHV DQG KLJKHU FXVWRPHU VDWLVIDFWLRQ ZKLOH DYRLGLQJXQQHFHVVDU\FRVWV7RȴQGRXWPRUHDERXWKRZ$G\HQȇV multi–acquirer solution in France can help your business, please contact your account manager or FRQWDFWXV uploads/Geographie/ france-acquiring-guide.pdf

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