The Cheque has been used to pay for jobs or products for more than two centuries. However, with the passage of time and the emergence of new technologies, the cheque has lost prominence but is still a form of payment used in many transactions and invoices.
Today I will discuss about the What is Cheque, Types of Cheque and its characteristics.
Definition of a Cheque
The cheque is a document used to pay for something without the need to use physical money. In this type of transaction, they participate:
- The drawer , physical or legal person who issues and signs the cheque.
- The drawee or bank entity to which the payment is ordered and which acts as an intermediary thereof.
- The beneficiary or holder , which is the person or company that receives the payment for that service or product.
Types of Cheques
There are 6 types of cheques available. We refer to the modalities of issuing this form of payment still widely used.
The types of cheques depend on the issuer, the indication of the beneficiary, the possibility of being endorsed and the possibility of being paid instead of deposited.
1. Cheque to order
So-called non-to-order cheques are issued with the indication of the beneficiary, and only the beneficiary can receive the amount in question . This is a type of cheque that can not be endorsed, thus, safer for the issuer.
2.Cheque to bearer
The second type of cheque that we speak to you is the cheque to the bearer , that is, the one that is not directed at any specific person and that can be paid to whoever has it in his possession . So a less secure option.
3. Nominal cheque
The nominative cheque follows. As the name implies, it already appoints the beneficiary of the sum in question and must indicate the name in full in order to be clear who can move the money . To raise the amount in question, the bank will require you to present an identification document.
4. Cross cheque
The fourth type of cheque is one that is crossed in its upper left corner with two parallel, diagonal lines . Within this, there are two subtypes of crossed cheques:
- General Crossing – When there is no indication within the lines that cross it, it means that this type of cheque must be deposited, being free to choose the institution. If, by chance, you are a customer of the same bank that issued it, you can receive it at the counter.
- Special Crossing – When the name of a bank is entered between the lines, you can only deposit the cheque at the same bank. However, the possibility remains of being paid to the counter if you are a customer of that bank.
5.Open Cheque /Uncrossed:
When no parallel line drawn in the corner of cheque, it is called open Cheque or “Uncrossed Cheque” The open cheque is a bearer or order cheque that why the payment of this cheque can be easily taken over the courter of the bank.
6. Anti-Dated Cheque
If a cheque bears present to the bank a date prior than the date on it, it is called “Anti-Dated Cheque”. The cheque is valid up to 3 month from the date of cheque stated on it.
7. Post-Dated Cheque (PDC)
If a cheque bears a date which is upcoming (future date) then it is called post-date cheque, this cheque can’t be honoured prior than the date on the cheque.
8. Stale Cheque
A cheque is presented for payment after 3months from the cheque’s date it is called stale cheque. This cheque can be honoured by the bank.
9. Stale Cheque
If a cheque is presented for payment after three months from the date of the cheque it is called stale cheque. A stale cheque is not honoured by the bank.
The cheque drawer should cancel this cheque and make a new one.
10. Checked Visa
A certified cheque is one for which the bank guarantees payment . The importance it sets is captive in the account of the person who issues it for at least eight days .
11. Bank cheque
The last type of cheque the bank cheque. It is issued by the bank itself and not by the account holder, in favor of a third person, always with an indication of his name . In practice, it is also a nominative cheque.
History of Cheque
The cheque began to be used for the first time in England , at the end of the 18th century although the generalization of its use came with banking institutions, in the 19th century.
The presentation to collection of a cheque must be made, for cheques issued or payable in Spain, within 15 days from its date of issue . For cheques issued in the rest of Europe, the term is 20 days and, for non-European countries, the term is 60 days, if paid in Spain.
After said terms, the cheque can be revoked , that is, canceled by the drawer.
The issuance of the cheque implies the obligation to make cash without restrictions in regard to the bank and to have money in the account , by the drawer.
If a default occurs, the beneficiary of the cheque can act in an executive manner against the drawer for late payments.