Computer Transactions Speed Up French Financial Industry: From Automobile Purchases to Credit Card Validations, Technology Takes over Mundane Yet Costly Services
Nahon, Georges, American Banker
The financial industry in France is undergoing dramatic and rapid change. It is especially evident in the areas of consumer credit, credit cards, and banking services.
As an example, retail loans for consumer purchases ranging from home appliances to automobiles are now being handled in a matter of minutes without a lot of paperwork. Credit cards can be validated on the spot in seconds.
Such mundane, yet costly, banking services as checking balances, transferring funds, and getting regular account statements are now being routinely performed from the homes and offices of bank customers.
It is all done through videotex -- known as Teletel in France -- the data
processing system that enables terminals, or PCs, to covnerse with a variety of mainframes anywhere in the country.
Credit for the success of videotex in France must be shared by the Minitel stand-alone videotex terminal that may be leased for about $8 a month; it is being distributed free to all telephone customers.
Among the latest used of Teletel is JADE, the first product in a software line designed for videotex and transactional purposes by Sligos, which is naming the products after precious stones. JADE is a service that enables retailers to validate credit cards immediately. Current credit card customers of JADE, which is operated by a company known as Valitel, include American Express, Diner's Club, and Visa, and a few private cards such as Hertz.
JADE operates with the addition of a card reader to a Minitel in the retailer's shop. The retailer enters the customer's magnetic stripe card in the reader and keys in the amount of the purchase. Then Valitel's host computer transmits the information to the appropriate credit card company computer, which performs the validation procedure and responds to the retailer's Minitel. All the necessary protocol conversions in the information chain are handled automatically.
French retailers pay the equivalent of about $20 for installation of the Minitel and card reader, and about $25 a month for the service. There are currently 750 terminals in place; and Valitel reports that it is handling 65,000 transactions monthly.
Another professional application for Teletel that has gained immediate acceptance here is on-line credit evaluations.
At least five companies, one an auto manufacturer, are now using Teletel to deliver instant credit appraisals. Several of them, including Cetelem -- a subsidiary of the Compagnie Bancaire Group -- offer the service around the clock, seven days a week.
Cetelem, which specializes in credit arrangements for consumer goods, has installed Minitels in some 2,300 retail shops around France since last January. In the last nine months it has handled more than 100,000 consumer credit applications.
That total, according to Pierre Boucher, managing director of Cetelem, represented more than 39% of the company's business. …