Choose double security with your bank
Two precautions being better than one use the double payment securities now offered by most banks. In addition to the traditional visual cryptogram (generally a three-digit code located behind your card), you can validate your online payment in a second step. Usually by entering a code which is sent by your bank just after payment.
This is most of the time a code sent by SMS that you must enter to confirm your order. Sometimes you also have to open your bank’s app on your smartphone to complete the transaction.
Avoid saving your bank details
The COVID-19 health crisis is also an economic crisis of exceptional magnitude. From the start, states sought to limit its effects on business. In this article, we will focus on one of the most publicized aid schemes, especially because of its spectacular amounts: the guaranteed loan to businesses (PGE). This system is so named because the State provides its guarantee to loans granted by private actors such as banks, in fact bearing most of the high risk merchant account providers. It is therefore a matter of political steering, in times of crisis, of the commercial tool that is corporate credit. This questions the respective roles of public and private actors to support the economy and shoulder the risks involved.
MASSIVE SUPPORT FOR BUSINESSES THROUGH CREDIT
On March 25, the state created EMPs so that banks grant bank loans to businesses to deal with cash flow shortages and prevent them from going bankrupt. Out of a total envelope of 300 billion euros, more than 100 billion euros of PGE were granted in mid-May, according to the French Federation of Banks, which corresponds to more than 500,000 requests for credit. This type of intervention is not specific to France: in the United States, the CARES Act, amounting to $ 2.2 trillion – passed on March 27, 2020 and intended to help American businesses and citizens face the economic crisis caused by the coronavirus – is, for the most part, made up of credits.
How can the state encourage banks to lend more and to everyone when the latter have the legal freedom to choose their customers? In the case of EMPs, the first tool is the guarantee of up to 90% of the loans, via the Public Investment Bank (BPI). Political management here passes through the criteria for accepting guarantees by the BPI, relaxed throughout the crisis, in particular in response to recurring testimonies from small businesses unable to obtain loans.
The State thus went so far as to allow companies in compulsory liquidation to benefit from the EMP. The second mode of intervention, from March 19, was the simplification of the referral procedure of the Credit Mediation: created in 2008, it receives appeal requests from companies in the face of bank credit refusals. As a result, referrals experienced unprecedented levels: 3,429 for the month of April alone, or more than three times the number of requests for the whole of 2019. Finally, the last lever was direct support: mid -April, the BPI launched the “rebound” loan in partnership with the regions, which ranges from 10,000 to 300,000 euros, and which is 100% guaranteed by the State.
THE SEDUCTION OF CREDIT AS A POLITICAL TOOL
These developments in the way the state has sought to support the development of bank lending invite us to reflect on what state support through credit means. First, credit is an attractive tool for a State like businesses. Aid granted by a bank and repayable, it remains in the market sector and does not give the impression of a handout. In addition, the state does not spend money because it only intervenes when the guarantee is mobilized, so it is massive aid that does not appear in the budget (Quinn, 2019).
Even if this support for businesses is channeled through private operators, it remains a tool of public policy. Banks, particularly in France, are strongly linked to the State: many of them were nationalized until the 1980s or 1990s, they are often run by former senior officials; if they are independent companies, their links with the Ministry of the Economy are known. This is why, in an interview with an agency director, we asked him what the selection criteria were, he replied, with a disapproving tone: the directives come from Berry. Thus, to the three instruments of state intervention presented above we can add a fourth: political pressure on the banks.