Introduction of travelers cheques

Travelers checks are pre-printed checks with a variable value, in general 20, 50 or 100 units of currency selected. Travelers
checks can be issued in different currencies, as examples U.S. dollars, Canadian dollars, pounds, yen, and euro. They can be
bought from banks with a commission (1 to 2 %), or from specialized banking agencies like American Express, Thomas Cook. At
the time of purchase, you must sign each check in the box provided for this purpose. Note the numbers of your travelers checks,
date and place of purchase you need in case of loss or theft. You can then change your travelers checks into cash (local currency)
in an International bank and in some hotels. You must provide proof of identity and countersign each check to the employee
making the change and compare your signature to that made when purchasing. Most of banks charge a small fee for the change.
You can also directly use your travelers checks as payment in travel agencies, some hotels, restaurants, and shops.

History
Travelers cheques were first issued on 1 January 1772 by the London Credit Exchange Company for use in ninety European cities,
and in 1874, Thomas Cook was issuing 'circular notes' that operated in the manner of traveler's cheques. American Express was
the first company to develop a large-scale traveller's cheque system in 1891, and is still the largest issuer of traveler's cheques
today by volume. American Express's introduction of traveler's cheques is traditionally attributed to employee Marcellus
Flemming Berry, after company president J.C. Fargo had problems in smaller European cities obtaining funds with a letter of
credit. Between the 1950s and the 1990s, travelers cheques became one of the main ways that people took money on vacation
for use in foreign countries without the risks associated with carrying large amounts of cash. Several brands of travelers cheques
have been marketed; the most familiar of those were Thomas Cook Group, Bank of America and American Express.
Legislation for travelers cheques
A traveler's check is essentially a specialized form of check designed to provide travelers a safer form of money. Traveler's checks
follow the same basic rules of checks in that they are drafts. But there are several unique elements of traveler's checks designed
to make them better suited for usage during travel. The primary role of a traveler's check is to serve as a different kind of
currency, as each traveler's check is made out for a fixed amount, even prior to the purchase of those checks. When a purchaser
gets traveler's checks, he or she is spending his or her own money in exchange for a set of traveler's checks of equal value so that
he or she may use those traveler's checks as unconditional payments to another party no matter where the traveler may go. The
main advantage of a traveler's check is that if it is lost, the issuer of that traveler's check will likely issue a replacement check,
assuming that the traveler can show evidence of purchase of the traveler's check. This means that traveler's checks have a fair
degree of safety to them for the traveler, as even if they are stolen the traveler will be able to obtain a replacement. For this
reason, traveler's checks are often considered more useful than cash for travelers, as cash, when stolen or lost, will not be
replaced. Furthermore, traveler's checks can be obtained in any of a number of different currencies, increasing their overall
utility. A traveler's check differs from common checks in some ways, as the terms of a standard check are modified with
reference to traveler's checks. A traveler's check, for instance, is technically a draft, but it might also be examined as a form of
promissory note. When viewed as such, the traveler would be loaning money to the issuer of those traveler's checks in exchange
for the right to call in that debt at any time by cashing the traveler's check. In that light, when a traveler uses a traveler's check
for a payment, then he or she is only transferring the right to call in the debt of the traveler's check. This is not the official form of

how a traveler's check functions, although it is a useful way to understand the differences between traveler's checks and regular
checks. For a traveler's check, the three primary terms of a draft are redefined somewhat. Normally, in a draft, there are three
parties involved: the drawer (issuer or maker), the drawee, and the payee. But in a traveler's check, there are four parties
involved. The payee remains the same as the party to whom the traveler's check is made payable in exchange for goods or
services. The issuer of the traveler's check is the organization that makes the traveler's check in the first place; this is often a
major company such as American Express. This company is the one from whom money is being drawn to support the check in all
instances and is the party responsible for replacing the check. The agent, on the other hand, is the party that actually sells the
traveler's checks directly to purchasers. The agent might be a bank or other store which had previously obtained the traveler's
checks from the issuer. The purchaser, then, is the party that buys a traveler's check for the sake of using it later in payment to a
payee or for deposit. Traveler's checks have certain security risks associated with them, especially because they are effectively a
form of cash. As a result, in some cases the payee may ask for ID of some sort to ensure that the traveler's check in question is
actually connected to the person attempting to make payment with it. The payee may then check the signature on that ID against
the signature which the purchaser should have put on the traveler's check. Payees may also seek confirmation with the traveler's
checks' issuers in order to ensure that they are valid. This will help avoid the acceptance of stolen traveler's checks.
Advantages of using travelers cheques
Travellers cheques are often more convenient and safer to carry abroad than cash. Lost or stolen travellers cheques may be
easier and faster to replace than a lost or stolen credit card. Travellers cheques may be cancelled easily and replaced easily.
Travellers cheques are safer than carrying cash. Consumers that lose travellers cheques may call the issuing company and have
them replaced. In most cases, the traveler may have them replaced within 24 to 48 hours. Lost cash may never be replaced. Fees
for travellers cheques are often less expensive than credit card fees. Travellers cheques may be exchanged for local currency for
use in non-credit accepting establishments. Transportation companies or local family-owned establishments often do not accept
credit cards for payment. Travellers cheques offer consumers more vendor options. Travelers cheques may be used as a
budgeting tool. Consumers may buy only a certain amount of travellers cheques to control spending. Credit cards may be
available for emergency purposes.
Disadvantages of using travelers cheques
Consumers must pre-determine an amount of currency to convert prior to travel. Travellers may overestimate or underestimate
the amount of money needed for the trip. The currency exchange rates may change during travel. The exchange rates may
become more favorable after the consumer arrives in the country, than when the travellers cheques are issued. Fees may be
associated with using travellers cheques. Unlike credit cards, the cash is gone immediately. Credit cards will be paid a month
after the travel occurs. Some vendors do not accept travellers cheques. Expenses are more difficult to keep track of with
travellers cheques than with credit cards.
Credit cards
Major credit cards with the Visa, MasterCard or American Express logo are accepted in most locations around the world. There
are reasons Credit cards became popular around the world. Credit cards allow consumers to keep track of all expenditures spent
on the vacation. When the monthly bill arrives, consumers will view an itemized list of each item purchased on holiday, as well
as, the cost of the item. This information may be easily transported to accounting software or Excel spreadsheet. If the credit
card is lost or stolen, consumers will not be responsible for any unauthorized purchases made on the card. Consumers should not
be concerned about currency exchange. The credit card company will convert the currency for you. Some companies do not
charge fees for currency exchange. Through Dynamic Currency Conversion, credit cards allow consumers the option of payment
in local currency. With local currency payment, the fees are only 2% to 3%. Retailers that charge in the consumers currency may
charge as much as 4% on top of the original price. Many credit card companies will offer free travellers insurance while travelling
abroad. Some credit cards offer special concierge services. These services may include locating transportation or chauffeur
service, hotels, tourist attractions, restaurants or numerous other perks. Consumers may receive reward points or airline miles
for purchases made on the credit card. This is a way to reward the customer for using the card. Travellers do not have to pay off
the trip in full at once. The expenses of the trip may be paid over several months.

But using credit card there will also be disadvantages like In some remote locations and smaller establishments, credit cards are
not accepted. Some taxi cabs or other forms of transportation may not accept credit cards. In some regions, consumers may be
charged more for credit card purchases. Some credit cards charge as per transaction fee for every purchase made outside of the
country. Currency conversion fees are typically around 2% or 3% for each transaction. Credit cards often offer introductory
interest rates for cash advances. Some credit card companies will not honor the introductory rates outside of the country.
Balances that are not paid immediately may accrue interest and increase the total cost of the holiday.
Conclusion
Sri Lanka Banks Association (SLBA) took a decision to stop issuance of travellers cheques from November 2013 .SLBA took
decision At a discussion held with the Central, Bank all banks agreed to discontinue the issuance of travellers cheques. The
reason was, as per the SLBA, the usage of travellers cheques being unpopular. Most of the travellers prefer to carry credit or
debit cards or cash itself. And since people have the facility to carry credit or debit cards and also cash up to US $ 5000, there is
hardly any need to use travellers cheques. Even in the world now the trend has changed and people have got away with the
paper use.
The wider acceptance and better security of the alternative such as credit cards has meant a significant decline in the use of
travelers cheques around the world. In addition, the security issues for retailers accepting travelers cheques has meant that
many businesses no longer accept them, making them less attractive to travelers. This has led to complaints about the difficulty
that holders have in using them. In much of Europe and Asia, the cheques are no longer widely accepted and cannot easily be
cashed, even at the banks that issue the cheques. But the best approach to handling monetary concerns while traveling overseas
may be to use a combination of traveler's checks and credit cards. By cashing traveler's checks where and when it is convenient
and using credit cards to book online purchases and pay for specific point-of-sale transactions, you may be able to maximize the
advantages of both and minimize the disadvantages at the same time
.