To the Editor:

Allen Lipis' commentary, "The Paper Check Is Here to Stay - and That's Good News for Banks" (Dec. 19, page 17), is the lament of the horseshoe maker when the internal combustion engine appeared on the scene.

Changes do occur rapidly in banking. In a span of 20 years, we went from no magnetic-stripe bank cards to two billion, and from no automated teller machines or cash dispensers to 500,000 worldwide. Even faster change rates can be seen in the changeover from dumb terminals to personal computers in branches, in the conversion from mainframe to distributed computing, and in telephone-based banking services.

Whatever is holding up check replacement would be swept away with three simple changes:

*Stop relying on the check image and all its "empty geography." Replace the image with the serial number, payee, amount, and possibly a signature.

*Use a new instrument to create portable value, such as a smart card that is of low cost and reusable. This instrument would also be transportable by telephone, through point of sale or card-to-card transfer, or physically like cash.

*Provide access via TV screen to bank statements, allowing a few free inquiries a month and, for a fee, paper printouts of the statements.

It is necessary for the check hierarchy to start phasing out its huge equipment infrastructure. It is the same lesson that the credit card associations must learn: If they block technology advances to preserve their horse-and-buggy business, they will only increase the attraction for nonbankers to offer viable, more productive, and more economical payment alternatives.

Jerome Svigals

Jerome Svigals Inc.

Redwood City, Calif.

Editor's note: While at IBM Corp., Mr. Svigals did pioneering work on the magnetic-ink technology for checks. He currently advocates smart card technology.

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