There are many ways for a bank account holder to request that their bank transfer funds from their account to a beneficiary. These include paying by card, withdrawing money from an automated teller machine (ATM), and scheduling a bank transfer. This article explains payment orders in France, including how they differ from traditional bank transfers.

Key takeaways

• A payment order involves a customer asking the bank to remit an amount of money to a beneficiary.
  
• Payment orders can take several forms, including debits, transfers, checks, withdrawals, and more.
  
• From creation to execution, payment orders follow several specific steps.
  
• Payment orders are generally secure but can pose several risks.
  
• Businesses can use payment orders to collect revenue and increase sales.
  

What is a payment order?

A payment order is a formal instruction from a customer to their bank to transfer funds to a beneficiary. The bank is responsible for processing payment orders and guaranteeing that funds are securely routed.

There are several types of payment orders, including bank transfers, direct debits, checks, cash withdrawals, card payments, and payments using paper instruments (e.g., bills of exchange or promissory notes). These can be one-time orders—relating to a specific transaction—or recurring orders—setting up a series of transfers on specific dates.

Payment orders allow individuals and businesses to settle bills, withdraw money, reimburse debts, pay salaries or rent, make purchases, send money to family or friends, and more. They are used daily.

Who is involved in payment orders?

Three entities are involved in the execution of payment orders:

• Issuer: Gives the instruction to make a payment and specifies the payment method
  
• Beneficiary: Receives the funds
  
• Financial institution: Facilitates the funds transfer
  

How do payment orders work?

The payment order process follows several key steps. First, the issuer creates the order. Then, the bank processes and validates the order. Finally, the financial institution executes the transaction, which is displayed on the issuer’s bank statement.

Create the order

The customer gives a payment order to their financial institution. Most commonly, the customer initiates the transaction online, via an ATM, or at a branch.

For a bank transfer, the issuer must provide specific information about the beneficiary, including name, address, and bank details found on a bank identity statement (relevé d’identité bancaire, or RIB). This can include an International Bank Account Number (IBAN), Bank Identifier Code (BIC), or Society for Worldwide Interbank Financial Telecommunication (SWIFT) code. The issuer must also indicate the transaction amount, currency, execution date, and frequency—either a one-time or recurring transaction.

Process and validate the order

Once the bank receives the payment order, it verifies the information. The bank also ensures that the order is in compliance by verifying the issuer’s signature or personal identification number (PIN). Before authorizing the transaction, the bank verifies that the funds are available in the issuer’s account.

Execute the order

If verification is successful, the bank authorizes the transaction and executes the payment order. Its role is to ensure secure routing of the funds and to guarantee transaction traceability.

Display the order

Funds are debited from the issuer’s bank account immediately or on a later date. The debit date depends on the type of payment order issued. For example, an automatic debit can be scheduled in advance and executed on a future date. In contrast, an instant wire transfer is executed within seconds. In both cases, the transaction amount is credited to the beneficiary’s account after the bank processes it.

The issuer can monitor payment status by consulting the online transaction history or their bank’s mobile application. They can also contact their financial institution directly or activate payment notifications for incoming or outgoing transactions.

What is the difference between a payment order and a transfer request?

“Payment order” is a generic term that involves any instruction to debit a bank account. This can include transfers, debits, checks, cash withdrawals, or card payments.

A transfer request is a type of payment order. The issuer instructs the bank to transfer a sum of money from one account to another. It is a fast, electronic transaction that avoids the use of checks or cards.

What are the advantages and disadvantages of payment orders?

Payment orders have several advantages for businesses, including the following:

• Secure and dependable payments protected by financial institutions’ rigorous security measures
  
• Maximum traceability with each transaction recorded
  
• Rapid collection of funds and increased revenues, specifically when a business accepts various payment methods
  

Payment orders also have several disadvantages, including the following:

• Risk of fraud, identity theft, or fraudulent use of bank data, even with security protocols in place
  
• Fees on certain transactions that are generally paid by the customer (e.g., for international payments or out-of-network withdrawals)
  
• Possible cancellations that risk nonpayment, in cases of insufficient funds, incorrect bank details, or technical issues
  

For banks to process payment orders promptly, businesses should verify the data they provide to financial institutions. They can also use enterprise resource planning (ERP) software to automatically generate payment orders.

Businesses can use payment processors—such as Stripe—that accept secure online and point-of-sale payments to help protect against fraud. With Stripe Payments, businesses can set up and accept 125+ payment methods for their customers and expand to new markets using multicurrency management.