What is cheques? Types of cheques currently on the market

The development of non-cash payments nowadays gradually replace the traditional payment method, cheques is one of them. What is a cheques? How many types of chequess are there? What are the characteristics of the cheques?

What is a cheques?

Cheques, also known as check, is an unconditional order document of the account holder (made on a pre-printed form in a statutory manner), ordering the bank – the organization managing the account – to extract from the account. your deposit to pay the person named on the cheques, either by his or her order or to pay the holder of the cheques a certain amount, either by cash or by bank transfer.

what-is-cheques

Entities involved in transactions with chequess:

  • Cheques handing party (issuing party): the person who signs the cheques to order the bank.
  • Payer (bank): Bank has an obligation to pay money on the order of the drawer.
  • Beneficiary: the party that receives money from the bank.

Characteristics of chequess

  • Term in nature: a cheques has monetary value only or is payable if its period of validity has not expired (commercial cheques). The duration of a cheques is indicated on the cheques and depends on the extent of the space that the cheques circulates and the laws of the countries.
  • Cheques can be transferred to many people consecutively by endorsement during the validity of the cheques.
  • Cheques is an order, so when the bank that receives the cheques, it is required to unconditionally obey the order unless the account issuing the cheques has no money or the cheques is not of sufficient legal nature.
  • Cheques must contain all information such as: location and date of making the cheques, name and address of the person requesting the deduction of the account, the account to be deducted, the paying bank, the name and address of the payee of the amount on the cheques. , signature of cheques issuer. If it is an organization, it must have signature of the account holder, chief accountant and seal of that organization.
  • Cheques consists of 2 sides: the front is pre-printed with the title to fill in the mandatory information of the cheques, the back side records the information about the transfer of the cheques.
  • Chequess are usually printed in volumes, consisting of a stub of a cheques for the drawer to keep the necessary information and a separate part to be handed over to the beneficiary.
  • Chequess are usually pre-printed by the bank and have blank lines for the drawer to fill out.

See also: What is certificate of deposit(LTNCD)? Compare certificates of deposit and passbook

Types of chequess

There are many ways to classify chequess, of which 4 are popular as follows:

1. According to the definition of the beneficiary

  • Cheques: paid to the individual or entity named on the cheques or to the assignee.
  • Anonymous chequess: pay the holder of the cheques.
  • Named cheques: paid to the payee indicated on the cheques.

2. According to requirements to ensure safety in cheques payments

  • Cheques is plain: the back is completely white, this cheques can be cashed by the bank.
  • Crossed cheques: on the back side is crossed with two parallel diagonal lines, this cheques can only be paid by credit to the beneficiary’s account at the bank. The purpose of the slash is to prevent cash withdrawal, used to transfer via banks.
  • Special crossed-out cheques: the front or back of the cheques is crossed out with two parallel diagonal lines, between the two diagonal lines is the name of the bank or bank branch. This cheques can only be deposited with the bank or bank branch indicated on it. In addition, a special crossed-out cheques can also write the name of the bank of collection to facilitate the processing when the cheques is denied by the paying bank.

3. According to the degree of guarantee, money will be received to the beneficiary

Bank’s cheques (or cash cheques): is a cheques issued by a bank, so the beneficiary will be guaranteed payment unless it is discovered that the cheques has been fraudulent. It is called a cash cheques because it has almost cash value because it will be paid immediately.

A cheques is a cheques that is guaranteed by the issuer’s bank that the person’s account has enough money to be deducted at the time of payment. In this case, the bank will usually write or stamp a guarantee on the cheques. The purpose of verification is to ensure the solvency of the cheques and to prevent overchequesing of the account balance.

See also: What is Mobile Banking? Should I use Mobile Banking?

4. According to the form of payment

  • Cash cheques: Used to withdraw cash at the bank.
  • Bank transfer cheques: Is a cheques drawn by the account holder and delivered directly to the beneficiary to fulfill its payment obligations.
  • Confirmation cheques (Guarantee cheques): The cheques is guaranteed solvency by the bank.

philippines-cheuqes

What are cheques used for?

Cheques is one of 5 forms of non-cash payment, commonly used in payment for goods and services. Chequess are favored by customers for their transferable features. They can use the cheques to pay someone else they want.

There are 5 forms of non-cash payment:

  • Payment by cheques.
  • Form of payment by authorized payment – Payment order.
  • Payment authorization form – Collection collection.
  • Payment form of letter of credit.
  • Form of bank card payment

However, a cheques also has the disadvantage that from when the payer is drawn to the time the beneficiary submits the cheques for payment, the payer’s account may not have enough balance to pay (except in the case of a guarantee cheques). Therefore, in fact, chequess are used more commonly.

Another issue that customers should keep in mind is the effective time of a cheques or how long it is to be used. Usually on each cheques, the date will be printed on the surface of the cheques, but for some international chequess, the information will be printed in English so the user needs to know how to read and understand the meaning. of that information.

Thus, you have grasped the basic information about chequess – 1 of the 5 current forms of non-cash payment. Knowing this information will help you when choosing the method of payment for goods and services in the method most suitable and convenient for you. In addition, many forms of payment such as payment order, bank card or electronic banking service are also chosen by many customers.

Refer: Tips for writting cheques

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