🌊 Payments in France’s overseas territories

Two regimes under one flag

France’s overseas territories fall under two separate regimes in EU law. The Treaty on the Functioning of the European Union (TFEU) divides them into two groups: outermost regions and overseas countries and territories. Which group a territory belongs to determines its currency, taxes, payment rails, and applicable law. Yet one flag covers them all, from Basse-Terre to Nouméa. A commercial offer launched for “France” without distinguishing between these territories applies the wrong tax rates to some of them. It also generates rejected payment orders, because the Pacific territories are outside the scope of the SEPA schemes.

The EU has nine outermost regions under Article 349 of the treaty. Five are French overseas departments and regions (Guadeloupe, French Guiana, Martinique, Réunion, and Mayotte), plus the French overseas collectivity of Saint Martin. The Canary Islands, the Azores, and Madeira complete the list (IEDOM, Rapport annuel économique La Réunion 2024). EU law applies there by default. The recognized exemptions stem from their insularity, remoteness, and small size, and they allow, among other things, a separate tax regime.

The overseas countries and territories (OCTs) form the other group. New Caledonia, French Polynesia, and Wallis and Futuna belong to it, as do Saint Pierre and Miquelon, Saint Barthélemy, and the French Southern and Antarctic Lands. These territories are outside the EU, and EU law has no direct effect there. Even French law applies only where it expressly says so, under the principle of legislative specialty; Book VII of the French Monetary and Financial Code sets out how that principle applies to the Pacific territories.

These three attributes form a grid with three independent columns. The first says which law applies, the second which currency is legal tender, and the third which rail carries the payment order. Looking at only one column leaves the other two open. The actual distribution supports a rough rule of thumb, with one exception. The three Pacific territories sit outside the euro, SEPA, and the EU all at once, while the other inhabited overseas territories stay on the euro and in SEPA whatever their EU status. The French Southern and Antarctic Lands, which have no banking system, fall outside this classification.

Currency and rails: euro and SEPA on one side, the CFP franc on the other

In the five overseas departments, Saint Martin, Saint Barthélemy, and Saint Pierre and Miquelon, a euro credit transfer is an ordinary SEPA credit transfer. The European Payments Council list places each of these territories within the geographic scope of the schemes, with the euro as currency and FR as the IBAN prefix (EPC409-09). No local membership and no domestic scheme sit on top of the European framework. Message formats and scheme rules are the same as in the rest of SEPA. A creditor that already collects direct debits in mainland France collects in Fort-de-France with the same files.

The European Payments Council attaches a caveat to its list that separates scheme scope from the reach of EU law. The list states that legislation adopted for the European Economic Area, including Regulation (EU) No 260/2012, applies fully and directly only to transactions between institutions located in the EU and the EEA. Being within a scheme’s scope comes from contractually adhering to the EPC rules. Whether an EU regulation applies depends instead on the territory’s status under the treaties. Saint Barthélemy and Saint Pierre and Miquelon therefore exchange payments in SEPA format without being covered by the same legislation as Guadeloupe, Saint Barthélemy’s neighbor.

The Pacific runs on a different currency. The CFP franc (ISO code XPF) is legal tender in New Caledonia, French Polynesia, and Wallis and Futuna. Created on December 26, 1945, it was pegged to the euro when the single currency was introduced. Since January 1, 1999, the French state has guaranteed convertibility at XPF 1,000 to €8.38 (IEOM, Rapport annuel économique Nouvelle-Calédonie 2024). Because the peg is fixed, the conversion rate never moves, and a receivable denominated in XPF carries no exchange rate risk. The conversion itself remains. A company that invoices in euros and collects in CFP francs pays a fee every time money crosses from one currency to the other.

The two Pacific banking markets clear their transactions locally, through their own systems. In New Caledonia, checks, credit transfers, direct debits, and interbank payment slips are exchanged through SIENC, the New Caledonia interbank exchange system. Its statistics exclude on-us transactions (IEOM, 2024). French Polynesia has its own platform. Both systems are migrating to a common standard, with full adoption set for September 30, 2026.

The COPS direct debit follows the mechanics of the SEPA direct debit, including its notification and presentation deadlines. The creditor obtains a SEPA creditor identifier (SCI), which its bank requests from the Banque de France on its behalf, and assigns its own unique mandate reference (UMR) of up to 35 Latin characters. Existing mandates remain valid, so no one has to sign again, and any blocks the debtor has placed carry over automatically to the new format. The creditor remains solely responsible for keeping the mandates.

• 14 calendar days’ advance notice before the due date, unless both parties agree on a different period, stating at least the due date and amount.
• Submission to the bank no later than 1 banking business day before the due date, and no earlier than 14 calendar days before, whatever the transaction type.
• Retention of the mandate for the entire relationship and for 13 months after it ends, which is the dispute period; the creditor must provide a copy to its bank if a debit is disputed.
• Expiry after 36 months without any debit being presented, counted from the last due date, even if that debit was refused, rejected, returned, or refunded.
• Mandatory notice to the debtor of the switch to COPS, covering the SCI, the UMRs concerned, the contact point for amending or revoking the mandate, and the contact point for complaints.

The COPS credit transfer expands the free-text field the payer uses to pass the payee the reference needed to match the payment. Remittance information grows from 31 to 140 characters, delivered to the payee in full and unaltered. The channels for submitting payment orders stay the same, which limits the work to file generation and updating bank account master data. Instant credit transfers are not part of the three core components being rolled out. They fall under a fourth, exploratory workstream, along with requests for information on transfers and closer interconnection between the two markets, with no set timeline (IEOM, 2024).

SEPA COM PACIFIQUE is the procedure that keeps euro payments flowing between SEPA and the Pacific territories, which are outside it. It has been in force since February 1, 2014. The interbank formats are identical to those of SEPA credit transfers and direct debits, though these formats do not govern the relationship between customers and their banks. The arrangement rests on the French Monetary and Financial Code (source: CFONB, the French banking standards committee). A mainland employer can therefore pay a salary in euros into a French Polynesian account using the messages it already produces.

IEDOM and IEOM: two institutes, two legal forms, one job

Two institutes carry out central bank functions overseas, under different legal forms. The Institut d’émission des départements d’outre-mer (IEDOM) became a simplified joint-stock company (SAS) 100%-owned by the Banque de France on January 1, 2017, under Article 152 of the Sapin 2 Act, published on December 10, 2016. It operates within the Eurosystem, on behalf of the Banque de France, in the overseas territories that use the euro (IEDOM, February 2017).

The Institut d’émission d’outre-mer (IEOM) has remained a public body. Created in 1966 to take over the note-issuing privilege originally held by the Banque de l’Indochine, it serves as the central bank for France’s Pacific territories. Article L. 712-5 of the French Monetary and Financial Code tasks it with ensuring, together with the Banque de France, the security of non-cash payment methods and the adequacy of the applicable standards. That mandate comes with a power to go public. If its recommendations are ignored, the IEOM can publish an unfavorable opinion on a payment method in the Journal officiel, France’s official gazette.

Currency in circulation is the stock of banknotes and coins outstanding in a territory. The issuing institutes publish it every year, denomination by denomination. In New Caledonia, theoretical banknote circulation reached XPF 32.6 billion in 2025, across 9.1 million notes, with an average note value of XPF 3,585, down from XPF 3,680 a year earlier. Per capita, it came to XPF 123,064, close to French Polynesia’s XPF 122,015. The XPF 1,000 note accounted for 44% of issuance and 46% of notes in circulation (IEOM, Rapport annuel économique Nouvelle-Calédonie 2025). That profile points to everyday, local transactional use.

The same institutes monitor fraud on non-cash payment methods, publishing amounts and rates territory by territory. In New Caledonia and Wallis and Futuna, total fraud rose 57.8% in 2024 to XPF 373.6 million, after halving the year before. Cards accounted for 45.9% of it, checks for 34.8%, and credit transfers for 19.2%. The card fraud rate was 0.048%, compared with 0.053% in mainland France and the overseas departments, making cards the most defrauded payment method in the territory, just ahead of checks at 0.04312%. Credit transfers remain the safest, at 0.002% (IEOM, 2024 data collection).

The two institutes also run the bank fee observatories, set up by Law No. 2010-1249 of October 22, 2010, and expanded by Law No. 2012-1270 of November 20, 2012, on economic regulation in the overseas territories. Twice a year, on April 1 and October 1, they collect the fees charged by every bank in the territories to check whether they are converging with mainland France. The 2025–2026 reports find that, as of April 2026, 9 of the 14 fees in the standard fee schedule remain higher in the euro-area territories than in mainland France. Five of those gaps exceed €2 (IEDOM, 2026).

The gap between the two columns flips depending on the type of service. Fixed account-holding fees, such as account maintenance and annual card fees, are higher overseas. Per-transaction fees for credit transfers and direct debits are the same or lower. The overseas premium therefore falls on holding an account, not on the transactions that go through it. In the Pacific, the IEOM reports ongoing convergence: account maintenance fees rose only 0.7%, versus 3.7% in mainland France, as of April 2026.

Moving money from one currency area to the other requires a currency conversion that the bank charges for. Because the peg is fixed and guaranteed, no currency hedging is needed, and no exchange rate movement explains a difference in amount. Banks charge a conversion fee plus the cost of the transfer itself, according to fee schedules published territory by territory in the observatories. A company that centralizes its cash in euros and pays its New Caledonian suppliers in XPF therefore bears a fee, not an exchange rate risk.

Taxes and customs: what gets added to the displayed price

The overseas departments are part of the EU customs territory, so goods shipped from mainland France pay no customs duty. They are not, however, part of the VAT territory. The two memberships therefore diverge: the same goods cross a tax border without crossing a customs border. French customs (DGDDI) classifies these departments as export territories relative to mainland France and the other member states. A shipment from Lyon to Saint-Denis, Réunion, is therefore VAT-exempt on departure as an export, then taxed on arrival as an import.

Rates also vary by department. Article 296 of the French General Tax Code (CGI) sets a standard rate of 8.5% and a reduced rate of 2.10% in Guadeloupe, Martinique, and Réunion. Article 294 of the same code provisionally exempts French Guiana and Mayotte, where the rate is therefore zero. A site displaying tax-inclusive prices must therefore apply one rate table to the first three departments and no tax to the other two. The applicable table depends on the destination department, determined from the delivery address the buyer enters.

On top of VAT comes the octroi de mer, a tax specific to France’s outermost regions with no equivalent elsewhere in the EU. Council Decision (EU) 2021/991 of June 7, 2021, authorizes France to grant exemptions or reductions for products made locally in Guadeloupe, French Guiana, Martinique, Mayotte, and Réunion. That authorization runs until December 31, 2027. Saint Martin, although an outermost region, is not covered. The annexed lists sort products into three parts, A, B, and C, for which the tax differential may not exceed 10, 20, and 30 percentage points, respectively.

The octroi de mer tariff is set product by product. In Opinion 19-A-12 of July 4, 2019, France’s competition authority (Autorité de la concurrence) noted that the octroi de mer tariff adopted for Guadeloupe in 2019 ran to more than 430 pages, with 78 separate lines for footwear alone. Rates for the same product vary from one department to another, so classification has to be redone line by line for each territory served. Companies surveyed described this work as a deterrent. That complexity partly explains why online retail lags overseas.

Since 2024, the public debate on overseas taxation has shifted as studies put a number on the octroi de mer’s actual share of prices. The study conducted for the Association des maires de France and ACCD’OM concludes that the octroi de mer accounts for only 4.4% of the final price of imported goods on average. Food price gaps with mainland France, by contrast, range from 30% to 42% depending on the territory. The octroi de mer therefore explains only a fraction of the price gap, most of which has other causes. A bill to fight the high cost of living in the overseas territories was introduced on July 30, 2025. The Senate passed it with amendments on October 28, 2025, and sent it to the National Assembly, where it was still pending in mid-August 2026.

Accepting payments and delivering: acceptance, lead times, and after-sales

Payment acceptance overseas relies on the same terminals and card schemes as in mainland France. Volumes and card ownership rates differ. In Réunion, 156.0 million terminal payments were recorded in 2024, worth €6,443 million, with an average ticket of €41.30. The average ticket has been falling steadily from €46 in 2020. The installed base totals 20,067 terminals, or 22.1 per 1,000 inhabitants. Interbank card ownership remains below one card per person, compared with 1.16 nationally (IEDOM, Rapport annuel économique La Réunion 2025).

The ratio of cash withdrawals to card payments is used as an indicator of how much a territory relies on cash. Reading it correctly requires both sides to be measured on the same basis. In Réunion, withdrawals now equal only 16% of the number of card payments but still 54% of their value. The IEDOM puts France as a whole at 6% by number and 17% by value, but on a basis that compares withdrawals with all transactions, not just card payments. The two series are therefore not directly comparable. In French Guiana, the IEDOM notes that cash accounts for more than half of point-of-sale and person-to-person transactions, and cards for only a third. Mobile phone payments are more common there than in mainland France. An overseas store therefore handles more cash than a mainland store with comparable revenue.

Pacific statistics are denominated in CFP francs and cover smaller populations. New Caledonia had 282,065 payment cards at the end of 2024, down 3.8%, or 1.05 cards per inhabitant, and 8,582 terminals. Transactions for the year totaled 38.0 million, worth XPF 207.7 billion. The average ticket was XPF 5,500, or about €46 at the fixed peg. Checks are becoming rare, with 2.7 million exchanged in 2024, down 33.6% year over year. Their average amount was XPF 91,400, consistent with residual use for large amounts (IEOM, 2024).

The main obstacle to online retail in the overseas territories is getting the parcel there, not collecting the payment. In its opinion of July 4, 2019, the competition authority found that of the dozens of major online retailers it surveyed, about a third offered delivery to the overseas departments, while all of them served mainland France. Those that do deliver often limit their range and leave out bulky items. Yet the demand is there. Overseas sales accounted on average for 2.2% of these retailers’ French revenue, and up to 6% or 7% for some, for about 3% of the population.

The shipping costs the competition authority recorded in 2019 were a large fraction of product prices. One computer retailer charged €84 to deliver a computer costing about €330 to Mayotte, so shipping came to more than a quarter of the price. A car parts seller charged €165 to ship to the overseas departments, versus €9.90 to mainland France, where shipping was free on orders over €120. On top of that come customs clearance fees charged by freight forwarders, between €8 and €15, usually passed on to the customer. These rates are set by destination rather than order value, and the free-shipping threshold offered in mainland France does not extend to the overseas departments. The cheaper the item, the more shipping weighs in the price paid.

Returning a product bought remotely falls under two separate legal regimes that allocate costs differently. The right of withdrawal gives consumers 14 days to cancel, then 14 days to send the product back, and the seller must refund them within 14 days of receiving the return. Return shipping is paid by the consumer, unless the seller decides otherwise. The legal guarantee of conformity allocates costs differently: using it must cost the consumer nothing, a rule the competition authority found was not always respected overseas.

• Plan for a taxed return flow. A product sent back to mainland France and then reshipped incurs new shipping and clearance costs; temporary importation, using the dedicated form, avoids paying VAT and octroi de mer twice on these round trips.
• Recover the octroi de mer on products not consumed locally. Consumers can get a refund of the taxes paid if the product goes back to mainland France, a formality usually handled by the carrier.
• Choose between tax-exclusive and local tax-inclusive pricing. Selling tax-exclusive shifts the bill to the customer at customs clearance; selling tax-inclusive at the overseas rate requires a rate table per department and a tax engine that treats French Guiana and Mayotte differently from the other three.
• Offer local pickup. Click-and-collect and pickup points shorten the last mile, but they limit the range to local stock and were still rare in the overseas departments, according to companies surveyed in 2019.
• Don’t count on the geo-blocking regulation. It excludes situations purely internal to one member state, which leaves real doubt about whether it applies between a consumer in an overseas department and a mainland site.

Trade credit is the time between a delivery and its payment. It is measured separately for receivables, in days of sales, and for payables, in days of purchases. In the euro-area overseas territories, customer payment terms stood at 42 days of sales in 2023. Supplier payment terms reached 48 days of purchases. The resulting cash gap came to 13 days of sales, five days more than for France as a whole. Mayotte stands out with 59 days on the customer side and 61 days on the supplier side, the only territory paying its suppliers beyond the 60-day legal limit (IEDOM and Banque de France, FIBEN data as of April 2025).