Where possible, therefore, the use of cheques should be discouraged. 3.4 Promote electronic retail payments and telecommunication systems: The first step towards promoting electronic retail payment systems is to provide low cost current and savings accounts that can be accessed with a cash dispenser card. The use of non-cash payment instruments, in particular, mobile and telephone banking can be promoted together with the use of high security standards, which would ensure reliability of the payment instrument. Although the payment options for e-commerce or e-money are catching up, there still remains a significant demand for increased efficiency in the delivery channels of these instruments. The ATM machines have now extended their scope to provide a wide range of services. Singapore has introduced an e-Giro system, which enables participating banks to effect transactions using browser-based PCs at their offices, while in other countries, rural and small businesses access through the use of telecommunication facilities is fast developing. 3.5 Introduce Common Payment Switches (CPSs): The CPSs can be used for managing the clearing of retail fund transfers initially among banks, but they are common platforms for local retail transactions, online real time fund transfers and for miscellaneous retail payments across banks. Through CPSs, both operators and customers will enjoy benefits of service outside banking hours, reduction of administration work and paper  BIS Review 61/2008  3  handling, on-line availability of information, ability to integrate future services, reduction of settlement risks on retail transactions, etc.
Although the gradual move out of cash has made paper-based instruments such as money orders, postal orders, bank drafts etc., popular for several decades, their market sizes have continued to decline, largely due to inherited inefficiencies and cumbersome processes in effecting and settling payments. Some of these retail payment instruments and systems have now been replaced by electronic payment instruments and cards, and the tendency is to move towards electronic credit and debit transfers. According to the statistical reports of the Bank for International Settlements, some interesting movements in the use of retail payments in selected countries can be seen. In volume terms, France, Germany, Italy and the UK have reduced cheque use from a range of 3-38 percent of total non-cash payments, respectively, in 2000 to a range of 1-26 percent in 2006, while there are no cheques at all in the Netherlands. In Brazil too, cheques have decreased from 57 to 25 percent or less in the same period. Credit and debit transfers and cards, on the other hand, have risen significantly in these countries. This picture is different to that of India, where cheque use has reduced at a slow pace from 84% in 2004 to 73% in 2007 and in Sri Lanka from 75% to 65% in the same period, indicating the dominance of cheques. I believe the situation is the same for other countries in the SAARC region.