Cheques could be on way out

BANKERS' REPORT SAYS THEY ARE TOO EXPENSIVE TO PRODUCE AND PROCESS - USING PLASTIC AND DIRECT DEBITS WOULD BE CHEAPER CHEQUES could be on their way out in France as they cost too much

to process - and one in two could vanish as soon as 2017. The proposal, contained in a Comité Consultatif du Secteur Financier (part of the Banque de France) report into methods of payment,

comes as countries such as Germany and Belgium have all but cancelled cheques from their lives. In France cheque usage has fallen 4% in the past 10 years but 11% of people say they would be

upset if they were withdrawn altogether. The report said 18.3% of payments were still made by cheque and added the high cost of each transaction - between €0.50 and €1 for each one - was

largely covered by the shop or the bank, which led to increased costs elsewhere. The CCSF said the average cheque payment was €555 and the 3.1 billion cheques used each year cost €2.4bn.

Payment by credit or debit card, bank transfer or direct debit is suggested as an alternative as they are much cheaper. However, consumers' group UFC Que Choisir say the costs have been

over-estimated as much of the work in handling cheques has been automated. The national audit body Cour des Comptes said in 2010 the cost of a cheque transaction was between €0.15 and

€0.40. The CCSF said the usage of cheques and cash was a burden for the banks as it did not allow them to invest in new methods of payment - methods which were being introduced by rivals to

cut costs and undercut traditional banks' rates. The heavy need for cash meant that banks spent €2.6bn on cash machines and the CCSF wants more investment in electronic non-contact

payments using swipe cards, mobile phones or NFC technology and internet banking.