European monetary integration will help increase the use of payment cards as well as competition and costs associated with issuing and processing such cards, according to Datamonitor, a management consulting firm.

Datamonitor named electronic purses, smart cards and international credit cards as among the main beneficiaries of monetary integration in Europe.

The 11 member countries of the European Community are scheduled to adopt a single currency, the euro, in January 1999. However, a dual currency system consisting of national currencies alongside the euro will be used for several years after that date.

"Between 1999 and 2002, consumers will face confusion over which currency to use to pay for their retail and wholesale transactions, and many may well opt to use payments cards," Datamonitor predicted. This, the firm added, "will provide extra revenues for banks as well as merchant acquirers."

The firm however predicted that the added costs of processing different card payments "will be minimal compared with the future gains that such providers can grasp."

Germany, the Netherlands, and Switzerland have the largest number of electronic purse cards in use, while France and Britain have the largest volume of credit and debit card transactions.

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