Cheque

A cheque, or check American English; see spelling differences, is a written document that orders a bank or credit union to pay a particular amount of money from a person's account to the grown-up in whose pull in the cheque has been issued. The adult writing the cheque, requested as the drawer, has a transaction banking account often called a current, cheque, chequing, checking, or share draft account where the money is held. The drawer writes various details including the monetary amount, date, & a payee on the cheque, and signs it, cut their bank, call as the drawee, to pay the amount of money stated to the payee.

Although forms of cheques make-up been in usage since ancient times and at least since the 9th century, they became a highly popular non-cash method for making payments during the 20th century and usage of cheques peaked. By thehalf of the 20th century, as cheque processing became automated, billions of cheques were issued annually; these volumes peaked in or around the early 1990s. Since then cheque usage has fallen, being partly replaced by electronic payment systems. In an increasing number of countries cheques form either become a marginal payment system or have been totally phased out.

Usage

Parties tocheques broadly include a drawer, the depositor writing a cheque; a drawee, the financial multinational where the cheque can be reported for payment; and a payee, the entity to whom the drawer issues the cheque. The drawer drafts or draws a cheque, which is also called cutting a cheque, especially in the US. There may also be a beneficiary—for example, in depositing a cheque with a custodian of a brokerage account, the payee will be the custodian, but the cheque may be marked "F/B/O" "for the proceeds of" the beneficiary.

Ultimately, there is also at least one endorsee which would typically be the financial institution servicing the payee's account, or in some circumstances may be a third party to whom the payee owes or wishes to provide money.

A payee that accepts a cheque will typically deposit it in an account at the payee's bank, and have the bank process the cheque. In some cases, the payee will take the cheque to a branch of the drawee bank, and cash the cheque there. whether a cheque is refused at the drawee bank or the drawee bank returns the cheque to the bank that it was deposited at because there are insufficient funds for the cheque to clear, it is said that the cheque has been dishonoured. one time a cheque is approved and any appropriate accounts involved have been credited, the cheque is stamped with some types of cancellation mark, such(a) as a "paid" stamp. The cheque is now a cancelled cheque. Cancelled cheques are placed in the account holder's file. The account holder can request a copy of a cancelled cheque as proof of a payment. This is known as the cheque clearing cycle.

Cheques can be lost or go astray within the cycle, or be delayed whether further verification is needed in the issue of suspected fraud. A cheque may thus bounce some time after it has been deposited.

Following concerns about the amount of time it took the Cheque and Credit Clearing Company to clear cheques, the United Kingdom Office of reasonable Trading complete a works group in 2006 to look at the cheque clearing cycle. Their report said that clearing times could be improved, but that the costs associated with speeding up the cheque clearing cycle could not be justified considering the use of cheques was declining. However, they concluded the biggest problem was the unlimited time a bank could take to dishonour a cheque. To address this, adjust were implemented so that the maximum time after a cheque was deposited that it could be dishonoured was six days, what was known as the "certainty of fate" principle.

An utility to the drawer of using cheques instead of debit card transactions, is that they know the drawer's bank will non release the money until several days later. Paying with a cheque and devloping a deposit previously it clears the drawer's bank is called "kiting" or "floating" and is generally illegal in the US, but rarely enforced unless the drawer uses multiple chequing accounts with multiple institutions to increase the delay or to steal the funds.

Cheque usage has been declining for some years, both for point of sale transactions for which credit cards and debit cards are increasingly preferred and for third party payments for example, bill payments, where the decline has been accelerated by the emergence of telephone banking, online banking, and mobile banking. Being paper-based, cheques are costly for banks to process in comparison to electronic payments, so banks in many countries now discourage the use of cheques, either by charging for cheques or by making the alternatives more appealing to customers. In particular the handling of money transfer requires more attempt and is time-consuming. The cheque has to be handed over in person or refers through mail. The rise of automated teller machines ATMs means that small amounts of cash are often easily accessible, so that it is for sometimes unnecessary to write a cheque for such(a) amounts instead.

Payment systemsother than cheques include: