23 payment method in Europe. The existing giro infrastructure offered ready and safe solutions and captured the largest part of this growing payment volume.

_Giro payments moving to electronics._ The establishment of wages to banks systems (or direct deposit of payroll) was also an original impetus for electronic payment data transmission. Recurrent wage payments were originally initiated by sending magnetic tape data media to banks. Now, in most countries, the bulk of all payment orders are transmitted via telecommunication linkages. Businel payments have moved rapidly to electronics, primarily through use of direct terminal links to banks, while giro payment orders from individuals are still often paper-based. This is slowly changing as home banking terminals are being installed and ATMs can increasingly handle account transfers and deposits in addition to cash withdrawals and balance inquiries.

The clearing systems for credit transfer giro'Rayment **s** tarted shifting to electronics in the early 1970s, in some countries even in the late 1960s. More recently, the popularity of electronic bill payments (through preauthorized direct debits) has significantly increased in many European countries. The share of direct debits in total non-cash payments (Table 3) has risen most in the most giro-oriented countries (Germany and the Netherlands) but also in traditionally check dominated countries (the U.K. and France). The direct debit system offers the payor an easy and safe way to effect recurrent (electricity, gas) utility, telephone, insurance, rent, and other payments on a specified due date. The one drawback of direct debits for consumers is that, because the payee initiates the payment (albeit at a specified time each month), the payor gives up control over when the bill is paid. But this loss of payor control is a benefit for the payee since cash flows are more certain with a direct debit than with a payor-initiated payment. Direct debits can also significantly reduce the amount of paper circulating in the payment system. Since electro9 ic payments are usually less costly than are paper payments, resources will be more efficiently used.

_23 Company terminals (computerized cash management systems) offer an interactive service via an on-line link to a bank's payment service system. For example in Finland the first terminals were introduced in the late 1970s. Currently, banks offer a wide range of sophisticated payment services on-line to their corporate customers._

**_24_** _Home banking is still in the very early stages of development, but has strong potential to increase in the future as it offers considerable convenience and control benefits for consumer bill payments. Current home banking services use either push-button telephones, videotext service (e.g., Teletal in France), or home computers to access a bank's computer and initiate a funds transfer._

**_25_** _In Italy this progress has been more delayed. In 1983 the members of the CIPA (Italian Interbank Convention for Automation Problems) started to progressively develop automated payment management techniques in order to reduce the volume of paper payment media._

26 _Despite the historically large share of check transactions in France and the U.K., check truncation and electronic presentment of payment information is minor. Check truncation is one way in which the consumer could still use a check but the payment information it contains-the amount of the check, the payor and payee deposit and bank account numbers-would be read and captured at the bank where the check is first deposited and transmitted electronically to the paying institution. In France, only about 6% of checks are handled this way while in the U.K. truncation has yet to be introduced. In European countries with a historical reliance on giro payments, checks have never played a major role as a domestic payment instrument and efforts to modernize payment arrangements for ordinary checks have not been considered a worthwhile investment (CEPS, 1994)._