Fintech City Tour goes to Paris where the future of credit cards was pioneered

That headline contradicts the usual Anglo Saxon narrative about France – socialism, high taxes, bureaucracy and lack of innovation.

For a contrary view, consider this bit of history:

  • 1960: mag stripe credit cards invented in America
  • 1992: chip and pin credit cards invented in France
  • 2015: America scheduled to introduce chip and pin credit cards.

Due to that 25 year adoption lag, America has 50% of credit card fraud based on 25% of credit card use. Gizmodo has the story here.

Also, LeWeb is one of the better tech conferences and not only because everybody is happy to justify an expenses paid trip to Paris. The story goes that inspiration for Uber came during Le Web. That story may indicate more about lousy taxi experience in Paris than about innovation, but BlaBlaCar is the most innovative ride sharing car service outside Uber and that is a Paris based company. Innovation is alive and well in France, despite the oft told macroeconomic problems. Or possibly because of the macroeconomic problems (because “necessity is the mother of invention”).

So, I looked for a guide to Fintech innovation in France today and found Frederic Baud who is the founder of a crowdfunding service  and helped draft the French law on crowdfunding. I asked him what was different about crowdfunding in France. The answer speaks to the theory about necessity being the mother of invention.

  • “concerning debt, people have now the possibility to lend up to 1000€ per SMB, to any number of SMBs they want. A SMB can borrow up to 1 million euro through this mechanism. This is less favorable than the law in the UK, but it is a great advancement compared to the previous situation where banks had the monopoly of issuing credit. It is also a relatively better situation than the one in many other European countries, and the law had no real strings attached.
  • concerning equity, offers up to 1 millions € can now be broadcasted through the internet. This is interesting wrt the current situation in many countries, but in fact the law had a few strings that make it a bit less interesting, even though there is an order of magnitude with the fiasco we have been seeing in the US for the past 3 years.”

Necessity is the mother of invention. Countries that have lacked innovation capital via Institutional Funds are the most aggressive in their adoption of crowdfunding. This could result in a leap frog scenario, like mobile phones taking off in the developing world due to lack of land lines.

There is one French Fintech startup that looks like it could break out onto the global stage. Leetchi is like WePay but with a focus on Europe. This will be an interesting one to watch. We are seeing examples of European companies seizing the global market lead in payments (e.g Adyen and Klarna). The old narrative was that European ventures were copycats which were acquired by US ventures that became the global winners. The new narrative is that it is a two horse race with Asia being the key market to win.


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