Up to €420 million could be saved across the economy every year if an electronic payments system was accepted by Government and business, according to a new report.

The study, prepared by Accenture for the Information Society Commission (ISC), strongly recommends that an e-payments strategy be urgently adopted.

The report argues that the development of a "robust and ubiquitous e-enabled payment infrastructure" would promote national competitiveness and strengthen the domestic business environment.

"This is a win-win proposition for Government," said ISC chairman, Dr Danny O'Hare.

Accenture has estimated that up to €70 million of the potential savings to be gained from e-payments would fall directly to the Government, which is the largest issuer of cheques in the Republic.

Banks could save as much as €200 million each year, while business would be up to €120 million better off, the report suggests. An additional €30 million could be saved on cash-handling costs, according to the analysis.

The Republic currently has the highest level of cheque payment and cash usage in the EU.

Irish cheque payments represent one-third of all cashless transactions in volume terms, compared to 16 per cent in other EU states.

The publication of the report was welcomed by the Irish Payments Services Organisation (IPSO), the body responsible for the clearing of transactions between the banks.

IPSO chief executive, Mr Stewart McKinnon, called on the Government take leadership on the move to electronic payments.

Mr McKinnon said IPSO, which was consulted on the report, had been discussing the e-payments issue with Government for some time.

He said the benefits attached to a shift in strategy made it a "no-brainer" and called for immediate action in the area, possibly through the establishment on new policy guidelines for payments made by the Government itself.

As well as money savings, e-payments will facilitate the avoidance of fraud, money-laundering and tax evasion, according to Mr McKinnon.

"It is in everyone's interest," he added.

A spokesman for the ISC secretariat within the Department of the Taoiseach said that the Government had been waiting for the report and would consider it over coming weeks.

The Irish Bankers' Federation said meanwhile that it would study the Accenture report "with interest" and suggested that the Government might "rethink its Budget 2003 decision to increase stamp duty on bank cards and credit cards" in light of the savings to be gained through a move to e-payments.