The former president of the sport's world governing body denied approving fraudulent payments to the Frenchman.
The payment of 2m Swiss Francs was not legal according to prosecutors.
The men are on trial.
The trial was supposed to start on Wednesday, but was delayed after Blatter said he wasn't well.
He told the court that he was having trouble breathing.
The 86-year-old gave his testimony on Thursday and said he asked the Frenchman to be his adviser when he was first appointed president of the world governing body.
He said that the former France captain wanted a fee of more than one million Swiss Francs.
They settled on 300,000 Swiss Francs per year, with the outstanding amount to be paid at a later time.
"I knew when we started with him that wasn't the whole, and we would look at it later," he said.
He said it was an agreement between two athletes. I couldn't find anything wrong with that.
The three-time Ballon d'Or winner said he knew he would be paid one day.
When he left Fifa in 2002 he told the court he didn't need the money at the time and didn't want to bother with it again.
He said he was told to send an invoice by Fifa after he heard that two former employees had received large sums of money. The money was paid 10 days later after approval by the leader of the world's governing body.
The pair were banned from football in 2015.
The Swiss Office of the Attorney General accused the two men of fraud, criminal mismanagement and forgery.
The ban was a deliberate attempt to stop the Frenchman from becoming the next president of the sport's world governing body, he claimed.
A verdict is expected on July 8th.
The defendants could be sentenced to up to five years in prison.
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