FYI January 01, 2020

On This Day

1772 – The first traveler’s cheques, which could be used in 90 European cities, were issued by the London Credit Exchange Company.[18]
A traveler’s cheque[a] is a medium of exchange that can be used in place of hard currency. They can be denominated in one of a number of major world currencies and are preprinted, fixed-amount cheques designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.

They were generally used by people on vacation in foreign countries instead of cash, as many businesses used to accept traveler’s cheques as currency. The incentive for merchants and other parties to accept them lay in the fact that as long as the original signature (which the buyer is supposed to place on the cheque in ink as soon as they receive the cheque) and the signature made at the time the cheque is used are the same, the cheque’s issuer will unconditionally guarantee payment of the face amount even if the cheque was fraudulently issued, stolen, or lost. This means that a traveler’s cheque can never ‘bounce’ unless the issuer goes bankrupt and out of business. If a traveler’s cheque were lost or stolen, it can be replaced by the issuing financial institution.

The financial institutions issuing traveler’s cheques earn income in a number of ways. Firstly, they would charge a fee on sale of such cheques. In addition, they can earn interest for the period that the cheques are uncashed, while not paying any interest to the cheque holder, making them effectively interest-free loans. Also, the foreign exchange rate commonly used on traveler’s cheques (generally based on rates applicable at the time of purchase) is less favourable compared to other forms of obtaining foreign currency, especially those on credit card transactions (which use a rate applicable at the statement date). On the other hand, the set up cost and the cost of issuing and processing traveler’s cheques is much higher than for credit card transactions. The cheque issuer carries the exchange rate risk, and would normally pay a fee to hedge against the risk.

Their use has been in decline since the 1990s, when a variety of more convenient alternatives, such as credit cards, debit cards, pre-paid currency cards and automated teller machines, became more widely available and were easier for travelers to use. Traveler’s cheques are no longer widely accepted and cannot easily be cashed, even at the banks that issued them. The alternatives to traveler’s cheque were generally cheaper and more flexible. Travel money cards offer similar features to traveler’s cheques, including prepurchase of foreign currency at rates applicable at date of purchase, but offer greater ease and flexibility, such as use like a regular credit card, no need to get change in a local currency, besides other features.



Born On This Day

1769 – Marie-Louise Lachapelle, French obstetrician (d. 1821)[109]
Marie-Louise Lachapelle (1 January 1769 – 4 October 1821[1]) was a French midwife, head of obstetrics at the Hôtel-Dieu, the oldest hospital in Paris. She published textbooks about women’s bodies, gynecology, and obstetrics.[2] She argued against forceps deliveries and wrote Pratique des accouchements, long a standard obstetric text, which promoted natural deliveries. Lachapelle is generally regarded as the mother of modern obstetrics.




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