Reports of the death of the travelers check are greatly exaggerated.

And to borrow again from Mark Twain, "There's millions in it" - which the leaders in the business have been happily earning for a century.

Nevertheless, travelers checks are under serious attack from their plastic competitors: credit, debit, and even stored value cards.

At the same time, a shakeout is under way among the existing companies: American Express is strengthening its hold on the No. 1 spot in market share, which raises questions about the prospects of the bank-owned Visa and MasterCard brands.

"Travelers checks are still a very useful product for consumers," said Stephen Szekely, vice president of Payment Systems Inc., a Tampa-based consulting firm.

"Consumers like to see what they're spending, and travelers checks let them do that easily," he added. "But I have to say I think bankers do not view travelers checks as a priority. They provide them as a convenience to customers.

"Most banks are concentrating on cards," which have, indeed, been much more of a lucrative growth business.

Travelers checks currently account for less than 1% of consumer spending. However, they still have a big share of what is known in industry jargon as "on-trip spend" - money that travelers budget for a specific trip.

From yearend 1993 to yearend 1994, American Express picked up $1.11 billion in travelers check sales volume. Visa said it lost $2 billion in volume in the same time period, and MasterCard reported virtually no growth.

American Express said it has been successful in attracting banks to its brand.

Most recently, Bank of Tokyo announced that it would cease selling Visa Travelers Cheques and issue the American Express product instead.

Others that recently switched allegiances to Amex include Banc One Corp., Signet Banking Corp., First Chicago Corp., and First Hawaiian Inc.

"Our growth strategy is not just conversions, but also new products and services," said Toby Usnik, an American Express spokesman. He suggested the company is more committed to the long-term viability of the travelers check than either of the bank card associations - a message Amex has been trying to get out since MasterCard and Visa entered the fray in the late 1970s.

To demonstrate its seriousness, American Express introduced Cheques for Two, which allow two travelers to share a set of checks. It also launched a product called Global Money Pack, which includes travelers checks, foreign currency, and travel tips.

The New York-based company beefed up its delivery channels, making travelers checks available through bank branches, 1,700 American Express Travel Service offices, American Automobile Association offices, automated teller machines, and by mail.

The company is not, however, ignoring the plastic revolution.

"We are constantly on the lookout for card-based products," said Carl Lehmann, president of American Express Travelers Cheque group. "But we can't get so enamored of technology that we forget about the consumer.

"Our focus group research on plastic travelers checks showed very little demand for such a product," he said. "We found that consumers were perfectly happy with the paper-based travelers check. It's simple, it satisfies a customer need, and consumers feel safe and secure using it."

Visa points out that the world is moving toward plastic, and that a product like its new TravelMoney card is complementary to its existing product line.

"We felt it was very important because of the risk of fraud and counterfeiting to have the electronification of the travelers check as soon as possible," said Visa U.S.A. president Carl Pascarella. "We think (Visa TravelMoney) will make a significant difference in market share as we go forward."

Visa TravelMoney, which was launched late last year and is currently in tests with six banks around the world, is designed primarily for people traveling outside their home countries. Travelers set money aside in an account that they can draw down in local currency at any of the 200,000 Visa/Plus automated teller machines worldwide.

The six Visa banks in the test are First Bank System, Minneapolis; a First Bank subsidiary, Colorado National Bank of Denver; Bank of Scotland; and Banco Mexicano, Bancomer, and Confia, all of Mexico.

Visa, while declining to disclose quantitative data until the pilot ends on May 31, says the program is "performing right on target."

"The sales volume, average purchase amount, and average withdrawal amount are all meeting our expectations," said Jack Levine, Visa's vice president for cash products.

Mr. Levine admitted that the selection of three Mexican participants for the test phase was a bit of "unfortunate timing."

The pilot began Dec. 1, and later that month the Mexican government devalued the peso, causing a severe economic crisis.

Although few Mexican consumers are purchasing the cards, the Mexican banks remain committed to the program.

"Although the amounts are not what we expected before devaluation, for us, it is very important to stay in the program," said Remigio Gomez, director of international banking for Banco Mexicano.

"We believe in the plastic alternative," he added, "and in two or three months, when we recover from this current economic situation, we expect the program to be very successful."

Visa plans a full evaluation of the pilot results this summer, and will most likely roll the product out to all member institutions later in the year. Mr. Levine predicts success for the product. "It's going to have all the utility, safety, and security of a card," Mr. Pascarella said, "with the ease of a travelers check for segmentation."

But American Express' Mr. Lehmann remains dubious. He says the Visa TravelMoney card is fatally flawed. He points out that older consumers - a group that buys a good share of all travelers checks - are unlikely to take to the plastic alternative because it requires a visit to an ATM. Mr. Lehmann also underscored what he called the increased functionality of travelers checks - they are accepted at the point of sale.

Visa's Mr. Levine said that adding point of sale capabilities is a consideration for Visa TravelMoney, but for now, "We've been putting all our efforts behind the core product concept."

What's more, Visa said, consumers get a better exchange rate with the TravelMoney card than with travelers checks. "We feel very strongly about Visa TravelMoney," Mr. Pascarella said, "and the electronic side of that business being the wave of the future."

Nonetheless, Mr. Lehmann characterizes Visa's efforts as futile. "The travelers check will be around for a long, long time."

- Mickey Meece contributed to this article.

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