In some countries, such as the US, the payee may endorse the cheque, allowing them to specify a third party to whom it should be paid.Ĭheques are a type of bill of exchange that were developed as a way to make payments without the need to carry large amounts of money. Cheques are order instruments, and are not in general payable simply to the bearer as bearer instruments are, but must be paid to the payee. Both the drawer and payee may be natural persons or legal entities. In an increasing number of countries cheques have either become a marginal payment system or have been completely phased out.Ī cheque is a negotiable instrument instructing a financial institution to pay a specific amount of a specific currency from a specified transactional account held in the drawer's name with that institution. Since then cheque usage has fallen, being partly replaced by electronic payment systems, such as debit cards and credit cards. By the second half of the 20th century, as cheque processing became automated, billions of cheques were issued annually these volumes peaked in or around the early 1990s. The drawer writes various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay the amount of money stated to the payee.Īlthough forms of cheques have been in use 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.
The person writing the cheque, known as the drawer, has a transaction banking account (often called a current, cheque, chequing, checking, or share draft account) where the money is held. A cheque, or check ( American English see spelling differences), is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued.
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