What is a Eurocheck?
A Eurocheck, also called a "Eurocheque," is an alternative to the traveler’s check — a piece of paper that can be exchanged for the amount it specifies. It is similar in appearance and function to North American traveler checks and accepted by banks that display the European Union crest. This type of check can be written in different currencies and is accepted across European borders. The money represented by Eurochecks is considered safe since it can be retrieved even if the check itself is stolen or lost. While the Eurocheck was very popular from the early 1970s to the late 1990s, it is no longer issued or widely accepted as of 2002.
There are several reasons the Eurocheck fell out of use. First, processing these checks was expensive for banks compared to other forms of payment, such as by debit card. In addition, fraud was a serious issue that cost both retailers and banks. When it was first introduced, the Eurocheck was widely utilized, making up for both the cost of fraud and processing. Eventually, however, the use of this type of check severely declined as people began to pay by credit card or cash withdrawn from automated teller machines (ATMs).
A check guarantee card often accompanied a Eurocheck. This card was basically a short letter of credit, a document from a financial institution stating that they are willing to loan money to that individual if their purchase exceeds the amount available in the account. Eurochecks were usually not accepted if an individual did not have a check guarantee card. In 2002, this guarantee card was no longer considered valid, and Eurocheque International, a cooperative society, merged with Mastercard®. The merged companies released the Maestro® card, an internationally accepted debit card often considered the successor to Eurochecks and the check guarantee card.
Originally introduced for international use by travelers, Eurochecks were quickly adopted for domestic use as well. In fact, less than five percent of Eurochecks were used for international payments. At the end of the Eurocheck’s popularity, nearly 50 countries accepted this form of payment and about two dozen countries issued Eurochecks. Contrary to popular belief, Eurochecks are not related to the Eurodollar. Both the similarity of the name and the fact that Eurochecks were discontinued the same day Eurocurrency was introduced is pure coincidence.
The Eurocheck has largely fallen out of use, but still may be found in circulation. Companies such as Mastercard® warn against accepting Eurochecks from strangers, as they are no longer backed by financial institutions if the customer does not have enough money available in his or her account. Because of the risk of nonpayment, Eurochecks should only be accepted as payment when the customer is well-known and, even then, under special circumstances.
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