Irish citizens are less likely to have a bank account than are citizens of other European countries, according to a survey by the Irish Payment Services Organisation.

In its annual review, IPSO says that thousands of people - especially social welfare recipients - rely on alternative methods of managing their money. Such people would become particularly vulnerable in the event of a postal strike, according to the review.

IPSO chief executive Stewart McKinnon said that many would find themselves isolated as electronic payment systems become commonplace. "Across Europe, direct debits, credit transfers and other means of electronic payment are replacing traditional methods such as cheques and cash.

"Countries that have high banking levels and usage of electronic payments systems are seeing real benefits to their economies through increased efficiencies and lower payment costs," he said.

Mr McKinnon said the most economically competitive countries were those that had adapted electronic payment.

"Ireland, however, is lagging behind the rest of Europe. Our businesses continue to use cheques at a much higher level than the rest of Europe and our consumers are heavy users of cash rather than payment cards. If this does not change, our economy will be in trouble when Ireland participates fully in the Single Euro Payments Area in 2008," he said.

According to the report, there has been a significant decrease in card fraud in Ireland, with fraud loss to turnover being 50 per cent less than the European average of 0.17 per cent.