French banks called upon to halve cheque processing volumes

26 April 2012 | 4026 views | 1 cheque

The French banking industry has been called upon to make a bigger investment in electronic payment methods, under proposals to halve the number of cheques processed in the next five years.

The proposals, contained in a Comité Consultatif du Secteur Financier (CCSF, part of the Banque de France) report into methods of payment, suggests twenty ways that banks in France could unburden themselves of the high costs of processing paper cheques, which account for 18% of non-cash payments in the country. This compares to an EU average of under seven per cent.

The CCSF says the 3.1 billion cheques used each year by consumers cost retailers and banks a collective €2.4bn to handle and process.

The CCSF argues that the heavy costs of cash and cheque processing has dissuaded banks from investing in electronic payment systems, creating opportunities for non-bank competitors like PayPal to steal market share. The report urges the banking industry to work together on developing alternative Web-based and mobile payment channels.

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Ifor Williams - Fundtech - London | 01 May, 2012, 18:27

With the increasing dematerialization of all business transactions from purchase orders, invoices through to payments, the resilience of paper cheques as a payment mechanism in France is an anachronism.

Granted, France has an extensive real world branch network to support their customer base - almost four times the number of bank branches than in the UK for example - but it is not dissimilar to Germany which also has and extensive branch network but where cheques are virtually non-existent.

I suspect the “€2.4bn to handle and process” cheques does not include the cost of cheque fraud. According to some estimates, cheque fraud in the USA, a similar cheque intensive country, cost consumers and banks an estimated $20Bn a year. If France suffers similar levels of cheque fraud, then a rapid migration to secure electronic payments would be hugely beneficial.

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