The Lao currency is the kip, which is non-convertible (outside Laos), unstable and generally inflationary. Approximate exchange rates as of March 2011 are 1 euro = 11,000 kip, 1 GBP = 13,000, 1 THB = 260 kip & 1 USD = 8,000 kip. Make sure that you get rid of all your kip before you leave the country (unless keeping a handful as a souvenir: it is possible to exchange kip into foreign currencies at Vietiane airport.
The largest note is only 50,000 kip, the other notes in common circulation are 500, 1000, 2000, 5000, 10000 and 20000 kip; withdrawing the maximum of 700,000 kip from an ATM could result in 70 notes of 10,000 kip each. This makes carrying large quantities of kip quite inconvenient. Although less common than in the past US$ can sometimes be accepted, although usually at about 5-10% less than the official rate. Thai baht can also be accepted in many areas near the border, notably Vientiane. Beware though, that in remote places only kip is accepted and no ATMs will be available, so plan ahead.
More touristy places and banks are also accept the euro. So if you're from one of the euro countries, just bring some just in case. This could be cheaper than changing your euros into baht or US$ and then into kip.
There are many ATMs in Vientiane, and they have also appeared in other major cities including Luang Prabang, Vang Vieng, Savannekhet, Tha Khaek, Pakse and Luang Namtha. BCEL www.bcellaos.com, the largest bank, accepts both Visa/Cirrus and MasterCard/Maestro, but surcharges of US$1-2 apply. Don't rely on ATMs outside Vientiane, since they're still rare and often unreliable — but if it doesn't work the first time, keep trying every few hours (they tend to get emptied in the course of the day, due to the huge numbers of notes withdrawn).
Many banks, travel agents and guest houses will allow you to take out cash from a credit card as a cash advance. This usually occurs by withdrawing the money in US$ from the card as a cash advance; the card issuer will usually charge a fee (about 3%), the Lao bank involved will charge about 3%, and then the agent providing the cash advance might (or might not) charge another 3%, and then the amount is converted from US$ to kip at a poor rate to the US$, costing another 5% or so - hence, overall, these transactions are much more expensive than the typical charge for withdrawing cash from ATMs in other countries. However, as for example euros get pretty bad rates compared to US$ when exchanged in Laos, getting a cash advance in US$ and changing it to kips might actually save money compared to bringing euros with you to Laos. Expats living in Vientiane routinely get cash from ATMs in Nong Khai or Udon Thani (Thailand), where the maximum per transaction is mostly 20,000 baht, or ten times what you'll get in Laos.
The use of both ATMs and credit cards in banks is subject to computer operation, staff's computer skills, power cuts, telephone network breakdowns, National Day, etc etc. A few travellers have been forced out of the country prematurely as they couldn't withdraw funds to further their travels. Always bring cash as well. Changing money can be next to impossible outside major towns.
Banks give good rates, but seem to abide in morbid fear that a tourist might stumble upon them and change money. To avoid this unpleasant eventuality, they ensure that the banking hours are very restricted and that both Laos and European holidays are fully observed, with generous buffer days between the official holiday and resuming work. Private exchange booths are common in the major tourist areas.
Many shops start an hour's lunch break at noon, and some maintain the (now abolished) official French two-hour break. Nearly everything is closed on Sundays, except restaurants and many shops.