Plastic may take place of costly Eurocheques

The fate of the Eurocheque, accepted for years as an international means of payment in more than 40 countries, hangs in the balance just as the euro makes its entrance as a European currency.

The Eurocheque has already fallen out of favour with many consumers and banks are keen to encourage the trend away from the paper cheques, which are expensive to process.

The number of Eurocheque transactions processed by the Irish banks fell to 367,000 in 1996 from 522,000 five years earlier, according to the most recent figures available from the Irish Bankers' Federation (IBF).

The value of those transactions fell to £43 million from £62 million in 1991, while the number of Eurocheque cards issued was down to 113,000 in 1996 from 128,000.

"In the 1980s, the Eurocheque was the main facility available through the banking system for customers to arrange their holidays abroad. Now there are alternatives, the main one being the credit card which can be used for cash or payment purposes," says Mr Felix O'Regan of the IBF.

Europay, the European payments grouping associated with MasterCard, is working with member banks to rethink its strategy for Eurocheques, and bankers said killing off the product was a possibility.

"At this stage we can't say definitively that the Eurocheque will be eliminated," said Mr Rene Bloomers, who is in charge of the product at Europay.

Some 10 years ago, travellers wrote 43.1 million Eurocheques, which offered a guaranteed means of payment in five million shops and restaurants or could be cashed at a bank counter. But Eurocheque use has fallen steadily since then to 18.2 million last year. ABN AMRO, the Dutch bank, said customer demand for Eurocheques was falling by 25 per cent a year.

In Britain, National Westminster Bank said it had no plans to phase out Eurocheques but said demand was waning.

Instead, consumers increasingly use their bank cards to withdraw cash from automated teller machines, with debit cards also now gaining popularity.

National cash cards branded with Europay's "ec" pictogram or MasterCard's Cirrus logo can be used in cash machines around the world.

The possible demise of the Eurocheque may appear anomalous, just months before Europeans will be able to write cheques denominated in euros. Some banks are worried their customers will believe that because they use the same currency as another country, they will be able to write cheques to people or companies there with no extra charge.

Europay, like the rival Visa payments group, is keen to promote cards rather than paper cheques as the ideal means of payment in euros. Electronic card payments are cheaper to process than paper cheques.

"Whether the euro comes in or not has no direct relation with the fate of the Eurocheque," Mr Bloomers said.

Some individual banks, too, have started to steer customers away from Eurocheques by raising their handling charges.