A crossed account payee cheque is a type of cheque that is specifically designed to protect against fraud and misuse. It is called a "crossed" cheque because it has two parallel lines drawn diagonally across the face of the cheque, indicating that it can only be deposited into a bank account and cannot be cashed. This feature is intended to prevent the cheque from being used for any purpose other than depositing the funds into a bank account.
The account payee feature of a crossed cheque adds an additional level of security. It specifies that the cheque can only be deposited into the account of the payee, or the person or organization to whom the cheque is made out. This means that the cheque cannot be transferred or endorsed to another person or organization.
The use of crossed account payee cheques is particularly common in business transactions, where they are used to make payments to suppliers or contractors. They can also be used by individuals to make payments to organizations or other individuals, such as rent payments or utility bill payments.
One of the main benefits of crossed account payee cheques is that they provide a secure and convenient way to make payments without the need for cash or electronic transfers. They are also a useful tool for keeping track of financial transactions, as they leave a paper trail that can be easily traced and audited.
However, there are some limitations to using crossed account payee cheques. They can only be deposited into a bank account, so they may not be suitable for transactions that require immediate access to the funds. Additionally, some banks may charge a fee for processing a crossed account payee cheque, which can be a drawback for some users.
In summary, crossed account payee cheques are a secure and convenient way to make payments, particularly in business transactions. They provide an added level of protection against fraud and misuse, and also offer a paper trail that can be easily traced and audited. While they do have some limitations, they remain a popular choice for many individuals and organizations looking to make secure financial transactions.
A person who signs the cheque and transfers the instrument is an endorser and in whose favor it is transferred is endorsee. Satish and in return Mr. What are the types of crossing a cheque? Thus, both refer to same kinds of checks. The words 'not negotiable' can also be used to generate the same effect. Thus, both refer to same types of checks. So by mere crossing you are no longer making payment to PAYEE ONLY.
Difference between Cross Check and Account Payee Check
Wheeland holds an Associate of Arts in accounting and criminal justice. It provides an instruction to the paying bank to pay the amount only through a banker. Hope it will be helpful for you. Two types of crossing are associated with these marks- general crossing and special crossing. However, account payee cheques are still significant for making payments as they are secure, safe, and easy mode of transferring money. Since crossed cheques are not payable at the counter and the amount is credited into the bank account of the payee, this is a safer way of transferring money as compared to an uncrossed or an open cheque on which no amount of money has been written.
His name will be mentioned on cheque, so he is an authorized person to receive cash. Now this document as a check is provided to the bank that instructs to pay the person or company, the amount of money that has been stated in the check. Crossing a cheque means that it cannot be transferred to anyone else. This cheque has a validity of 3 months. Drawee: It is usually the bank on whom the drawer draws the cheque. This crossed cheque is no more a bearer cheque where anyone can negotiate and get payment across the counter. The difference between a crossed cheque and a bearer cheque is that a bearer check can be encashed by the payee whereas the crossed cheque cannot.
Crossed Check: Definition, Meaning, and How It Works
But in this case Ayesha is free to endorse the cheque in favor of Suresh and further Suresh is free to endorse the instrument in favor of Mukesh and so on…This means that crossing a cheque does not put restrictions on endorsements. This means you can't sign over the check to someone else, otherwise known as a special endorsement. These lines are also referred to as special or restrictive crossing. Basically, there are 3 parties involved, i. How to issue an account payee cheque? The bank will deposit the check into your account, but you will have to wait for the check to clear before the bank makes the funds available to you.
What is Account Payee Crossed Cheque & Bearer Cheque
Should I give the Account Payee check to my suppliers? A cheque is generally known as an Open cheque when it is not crossed whether it is made payable to the bearer or order. So Ajay needs to give Rs 2 lakh to Sanjay, and Sanjay needs to give Vijay the same amount. When you first get a crossed check, look it over and see if anything is written between the two lines. In case the cheque gets dishonored, Mukesh can sue Suresh and Suresh can sue Ayesha and Ayesh can sue Rohan. Understanding How a Crossed Check Works Predominantly used in Mexico, Australia, and several European and Asian countries, crossed checks signal specific instructions to a financial institution regarding how the funds may be handled.
Banks in the United States don't usually use crossed checks, however, the procedure is used commonly on checks from Great Britain. The cheque amount is to be deducted from his account. In simple words, a cheque is a transferable instrument to send and receive money without any physical transfer of cash. What is the remembered point while issuing an Account Payee cheque? The money will be credited to the account of the person or entity mentioned on the cheque. Cross check and Account payee check, can often create confusion, especially for those who fear banking terms. Thus when the transferability of the cheque is restricted, the question of negotiability does not arise. But in this case Ayesha is free to endorse the cheque in favor of Suresh and further Suresh is free to endorse the instrument in favor of Mukesh and so on…This means that crossing a cheque does not put restrictions on endorsements.
Difference between a Crossed Cheque and A/C Payee Cheque
Hence cheque writing should do safely. Minimum chances of cheque misuse as only the payee is eligible to withdraw the amount 3. For example, in the above example payee name is mine. A crossed check is one that includes two parallel lines through the top-left corner or across the entire check. The paying bank makes sure that amount is being credited to the account of the payee only. The signature of the payee of the cheque acts as an endorsement only. The Types Of Crossed Cheques Crossed cheques have 2 types that have a different set of instructions to the bank.
This makes secure payment to payee only, but any other third parties. The payee just needs to write the name of the person whom he wants to forward this cheque with his signature on the back side of the cheque. You're able to withdraw these funds through a bank teller or automated teller machine. These cheques are relatively safe because they can not be encashed or transferred to a third person. Therefore, in simple words, you may say that a person who holds the bank account and who sign on cheque is called the drawer.