First Florida Tests a Fast Card Approval System

Communications technology now being tested could enhance the credit card processing business by letting banks process transaction authorizations faster for small merchants.

First Florida Bank is the first institution to test the service, which is offered by Bell South, a regional telephone company serving the Southeast. The service should let banks process credit card authorizations for retailers in about seven seconds, using regular phone lines.

Bankers believe this will help them gain more merchant customers, especially small and medium-size merchants. This market is important because the market for credit card services to large retailers is saturated.

A |Backbone' Constituency

"Little shops are still the backbone of this area," said Lou Diaz, product manager of electronic services at First Florida, a $5.7 billion-asset institution based in Orlando with an average-size merchant processing business.

Credit card authorizations over regular phone lines typically take up to 30 seconds, which is a problem when retailers such as fast-food restaurants or video stores have heavy traffic at checkout counters. Large retailers process enough transactions to justify leasing costlier private data lines to get faster authorizations. Small retailers cannot afford such lines.

Banks and card companies have been experimenting with technologies - including radio and television signals and satellite transmission - to lower authorization response times in order to attract the business of merchants requiring low-cost, high-speed links.

In the First Florida test, equipment known as "packet switching" systems made by Northern Telecom will allow for high-speed data transmission on Bell South telephone lines. Packet switching involves breaking up data transmissions into small segments that are reassembled at the receiving end. The equipment is installed in telephone company offices.

"The technology is similar to leased lines but is less costly," Mr. Diaz said.

In addition to its merchant business, First Florida has a sizable agent bank program, in which it processes merchant transactions for customers of 150 smaller institutions in Florida.

"Our member banks are very excited by the speed and reliability of the packet network," said Mr. Diaz. "The time has come for this idea."

The bank recruited eight merchants for the trial in Orlando. The service is available whereever Bell South operates; the bank plans to begin offering it in the Miami area if the Orlando test succeeds.

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