Bank of Bermuda yesterday defended its decision to start charging customers 50 cents for every cheque they write.

The bank has also doubled the cost of ordering cheque books from $10 to $20 for 100 cheques, and will continue to charge $10 to post them out.

Customers had previously been able to write cheques for free, but on April 1, the bank introduced the 50 cents charge and doubled the cost of ordering cheque books.

The bank, which made profits of $43.7 million in the fourth quarter of last year, said only about a third of community transactions from customers involved cheques and they were more expensive to process than electronic transactions.

Michael Collins, the head of banking services, said: "Fees are a necessary part of our business. In the same way the cost of living rises in response to market changes, we must adjust fees to reflect the cost of doing business.

"We take fee changes extremely seriously and only after much research and discussion is any fee changed.

"In setting our new fees, we have to balance a competitive rate with with how much these services cost. We now have internet banking with EasyLink Online and GlobalConnect, as well as EasyLink Debit Cards, EasyLink ATMs and our automated EasyLink Telephone banking system.

"These services are faster, easier and require little administration as transactions are automated.

"The cost of providing these services is much lower and these savings are being passed onto clients. Manually intensive services cost more and this is reflected in our fee changes.

"Effectively, if there is an electronic alternative - for example paying with an EasyLink card rather than writing a cheque - it is cheaper for clients to use, and it is also becoming more popular.

"Cheque writing is rapidly declining and electronic alternatives are being used more frequently. Approximately two thirds of transactions in our community banking division are now electronic.

"We are, however, happy to assist clients in reviewing their options. You just need to visit a branch or call your relationship manager."

Bank of N.T. Butterfield charges customers for writing cheques and has two different types of chequing accounts.

The value chequing account costs $1 per cheque, but there are no monthly maintenance fees.

The regular chequing account gives customers ten free cheques per month and 45 cents for each afterwards. There is also a $6 monthly fee if customers do not keep an average balance of at least $2,000.

Bank of Butterfield charges customers $4 for each cheque book, and they have to order a minimum of two. Customers who chose to have their cheque books posted to them are charged registered mail costs.