A cheque is one of the most important and commonly used documents for financial transactions with banks around the world. In this article, I will discuss in detail what a cheque is, the different types of cheques that have been issued in the banking system and what the features of a cheque are.
Define What is Cheque?
A cheque is actually a piece of document/paper that orders the bank to transfer money from the bank account of an individual or an organisation to another bank account. It is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.
Basically, there are three parties to a cheque:
The person who draws the cheque, i.e. signing and directing the bank to pay the amount of money that becomes a Drawer. The bank where the cheque is drawn or ordered to pay a certain amount is written on the cheque that is drawee. And the third is the payee, the beneficiary, i.e. to whom the cheque is payable.
In addition to these three, there were two other parties in the cheque; Endorser and Endorsee. When a party transfers its right to accept payments to another party, it is called an Endorser. And the winning party is called an Endorsee, the right to be transferred.
How Cheques Work:
A cheque is an exchange invoice or document that promises a certain amount. It is printed for use by withdrawal banks as an accountant (payment). The payer writes a cheque and presents it to the payer, who takes it to a bank or other financial institution to negotiate money or deposit it in an account. Cheques eliminate the need for one party to send large amounts of corporate funds to another.
What are some major features of a cheque?
Following are some major features of the cheque:
1. Look at the design:
All the cheques had printed general banking information such as the bank name, branch address, holograms, and the bank logo. It can be difficult for a layman to distinguish between a real cheque and a fake cheque, if the cheque is designed in a simple way it can be easily thwarted. Each bank has its own design, logos and background print.
2. Uniform size:
Dimensions play a very important role in getting a cheque. Dimensions of the analysis of right and wrong can be easily seen. A typical study length is 202 mm and the width is 92 mm. The white stripe for MICR at the bottom of the cheque is 202 mm long and 13 mm wide. The length of the Sum box is 39 mm and the width is 8.5 mm. The length of the diagonal is 220 mm.4 For other countries, measurements may vary.
3. Paper Quality:
Regarding the security features in cheques, the main purpose is to secure the paper or it is easy to be cheated. The paper used for the manufacture of mostly cheques is carbon-free and UV-free paper, which means that when exposed to UV light, the paper does not give a fluorescent appearance. Instead, the visible UV properties are incorporated into the paper during the manufacturing process.
According to the previous study, watermarks are considered to be one of the best security features, as it cannot be resisted easily. There is a variety and variety of watermarks that can be seen in different bank surveys that can be seen under different lights and tools.
5. Color system:
Color systems vary from country to country. The effects of swelling are common in various countries where the ink dissolves when the waterfalls into the water. In Canadian studies, chemical markers are used on paper and are only visible under UV light.
6. Ultraviolet-visible features:
Every cheque has a UV visible feature, the cheque visible under UV light, gives a fluorescent appearance The UV visible features rooted in a cheque vary from bank to bank The fluorescent features in a cheque in the form of a bank logo, bank name, rupee column, capital letters on the back, the sum in words and sum in figures, signature and name of beneficiary These are the most secure features and can easily detect under UV light.
7. Microscopic signs:
Modern cheques have subtle features that are found under the entire paper or date column, the payment column, the amount field and the rupee column. These features can be viewed under a microscope or recognized with a magnifying glass. Therefore, these micro-letters are unreadable if the cheque is copied or scanned.
8. Empty pantograph:
A rectangular box is present on the cheque down to the account number column. The frame has a specific arrangement of lines based on the principle of steganography. Generally, if a true cheque is being copied, the cheque will show “VOID” or “COPIED” instead of a black field to fill in the amount.
What are the types of cheques?
Following are the major types of cheque:
- Bearer Cheque:
A bearer’s cheque is a cheque that is payable to the person who brings or carries the cheque. These cheques are cash on delivery, which means that if you take the cheque with you to the bank, you can get paid. The Bank does not require any other permissions from the issuer to make payments. How to identify bearer cheques? You’ll know it’s a bearer’s cheque when you see the words “or carrier” printed on it.
- Order Cheque:
In this type of cheque, the words ‘or carrier’ are omitted. Such cheques can only be issued to the person named on the cheque, and the bank will perform a background cheque to verify the identity of the cheque carrier paid.
- Crossed Cheque:
These cheques are relatively safe as they can only be on the cash at the payer’s bank. You may have seen cheques with two parallel lines slanted with the words “a / c payee” written in the top left-hand corner. This is a cross cheque. The lines ensure that no matter who issues the cheque, payment will only be made to the person who signed the cheque, in other words, the person who pay along with his / her account number.
- Open cheque
Open cheques are essentially uncrossed cheques. This cheque can be cashed at any bank and paid to the person presenting the cheque. This cheque can be transferred from the original recipient (original recipient) to another recipient. The issuer must sign both the front and back of the cheque.
- Post-Dated Cheque:
These types of cheques have a later collection date. Even if the bearer presents this cheque to the bank immediately after receiving it, the bank will only process the payment on the date indicated on the cheque. This cheque remains valid after the specified date. but not before.
- Stale Cheque
A stale cheque is a cheque that expires three months after the due date.
- Traveller’s Cheque
Please note that foreigners on vacation carry travellers’ cheques instead of carrying cash. These cheques are issued by one bank and can be issued in cash at a bank elsewhere or in another country. Passenger cheques are not exhaustive and may be used for future flights.
- Self Cheque
self cheques are identified by the writing “self” in the column of the drawer. self cheques can only be withdrawn at the issuing bank.
- Banker’s Cheque
These are the banks that issue these types of cheques. The bank will issue these cheques on behalf of the account holder and mail them to another person in the same town. Here, the guaranteed amount is deducted from the customer’s account and the bank issues a cheque. This is why bank cheques are called non -transferable fees because banks cannot defraud these cheques. It is valid for 3 months. If certain conditions are met, it can be re-certified.