Bank cheques

A cheque (British English) or check (American English); is a document that orders a bank, building society (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. 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. 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.

Although 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. 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.^[1] Since then cheque usage has fallen, being replaced by electronic payment systems, such as debit cards and credit cards. In an increasing number of countries cheques have either become a marginal payment system or have been completely phased out.^[2]^[3]

Nature of a cheque

A 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. Both the drawer and payee may be natural persons or legal entities. 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. 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.

Cheques 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. Paper money evolved from promissory notes, another form of negotiable instrument similar to cheques in that they were originally a written order to pay the given amount to whoever had it in their possession (the "bearer").

Spelling and etymology

Check is the original spelling in the English language.^[4]^[5] The newer spelling, cheque (from the French), is believed to have come into use around 1828, when the switch was made by James William Gilbart in his Practical Treatise on Banking.^[5] The spellings check, checque, and cheque were used interchangeably from the 17th century until the 20th century.^[6] However, since the 19th century, in the Commonwealth and Ireland, the spelling cheque (from the French word chèque) has become standard for the financial instrument, while check is used only for other meanings, thus distinguishing the two definitions in writing.^{[nb 1]}

In American English, the usual spelling for both is check.^[8]

Etymological dictionaries attribute the financial meaning of check to come from "a check against forgery", with the use of "check" to mean "control" stemming from the check used in chess, a term which came into English through French, Latin, Arabic, and ultimately from the Persian word shah, or "king".^[9]^[10]

History

The cheque had its origins in the ancient banking system, in which bankers would issue orders at the request of their customers, to pay money to identified payees. Such an order was referred to as a bill of exchange. The use of bills of exchange facilitated trade by eliminating the need for merchants to carry large quantities of currency (for example, gold) to purchase goods and services.

Early years

There is early evidence of using bill of exchange. In India, during the Maurya Empire (from 321 to 185 BC), a commercial instrument called the adesha was in use, which was an order on a banker desiring him to pay the money of the note to a third person.^[11]

The ancient Romans are believed to have used an early form of cheque known as praescriptiones in the 1st century BC.^[12]^{[ISBN missing]}

Beginning in the third century AD, banks in Persian territory began to issue letters of credit.^[13] These letters were termed čak, meaning "document" or "contract".^[14] The čak became the sakk later used by traders in the Abbasid Caliphate and other Arab-ruled lands.^[15] Transporting a paper sakk was more secure than transporting money. In the ninth century, a merchant in one country could cash a sakk drawn on his bank in another country.^[16] The Persian poet, Ferdowsi, used the term "cheque" several times in his famous book, Shahnameh, when referring to the Sasanid dynasty.

Ibn Hawqal, living in the 10th century, records the use of a cheque written in Aoudaghost which was worth 42,000 dinars.^[17]^[18]

In the 13th century the bill of exchange was developed in Venice as a legal device to allow international trade without the need to carry large amounts of gold and silver. Their use subsequently spread to other European countries.

In the early 1500s, to protect large accumulations of cash, people in the Dutch Republic began depositing their money with "cashiers". These cashiers held the money for a fee. Competition drove cashiers to offer additional services including paying money to any person bearing a written order from a depositor to do so. They kept the note as proof of payment. This concept went on to spread to England and elsewhere.^[19]

Modern era

By the 17th century, bills of exchange were being used for domestic payments in England. Cheques, a type of bill of exchange, then began to evolve. Initially, they were called drawn notes, because they enabled a customer to draw on the funds that he or she had in the account with a bank and required immediate payment. These were handwritten, and one of the earliest known still to be in existence was drawn on Messrs Morris and Clayton, scriveners and bankers based in the City of London, and dated 16 February 1659.^[20]

In 1717, the Bank of England pioneered the first use of a pre-printed form. These forms were printed on "cheque paper" to prevent fraud, and customers had to attend in person and obtain a numbered form from the cashier. Once written, the cheque was brought back to the bank for settlement. The suppression of banknotes in eighteenth-century England further promoted the use of cheques.^[21]

Until about 1770, an informal exchange of cheques took place between London banks. Clerks of each bank visited all the other banks to exchange cheques while keeping a tally of balances between them until they settled with each other. Daily cheque clearing began around 1770 when the bank clerks met at the Five Bells, a tavern in Lombard Street in the City of London, to exchange all their cheques in one place and settle the balances in cash. This was the first bankers' clearing house.

Provincial clearinghouses were established in major cities throughout the UK to facilitate the clearing of cheques on banks in the same town. Birmingham, Bradford, Bristol, Hull, Leeds, Leicester, Liverpool, Manchester, Newcastle, Nottingham, Sheffield, and Southampton all had their own clearinghouses.^[22]

In America, the Bank of New York began issuing cheques after its establishment by Alexander Hamilton in 1784.^[23] The oldest surviving example of a complete American chequebook from the 1790s was discovered by a family in New Jersey. The documents are in some ways similar to modern-day cheques, with some data pre-printed on sheets of paper alongside blank spaces for where other information could be hand-written as needed.^[24]

It is thought that the Commercial Bank of Scotland was the first bank to personalize its customers' cheques, in 1811, by printing the name of the account holder vertically along the left-hand edge. In 1830 the Bank of England introduced books of 50, 100, and 200 forms and counterparts, bound or stitched. These cheque books became a common format for the distribution of cheques to bank customers.

In the late 19th century, several countries formalized laws regarding cheques. The UK passed the Bills of Exchange Act 1882, and India passed the Negotiable Instruments Act, 1881;^[25] which both covered cheques.

In 1931, an attempt was made to simplify the international use of cheques by the Geneva Convention on the Unification of the Law Relating to Cheques.^[26] Many European and South American states, as well as Japan, joined the convention. However, countries including the US and members of the British Commonwealth did not participate and so it remained very difficult for cheques to be used across country borders.

In 1959 a standard for machine-readable characters (MICR) was agreed upon and patented in the US for use with cheques. This opened the way for the first automated reader/sorting machines for clearing cheques. As automation increased, the following years saw a dramatic change in the way in which cheques were handled and processed. Cheque volumes continued to grow; in the late 20th century, cheques were the most popular non-cash method for making payments, with billions of them processed each year. Most countries saw cheque volumes peak in the late 1980s or early 1990s, after which electronic payment methods became more popular and the use of cheques declined.

In 1969 cheque guarantee cards were introduced in several countries, allowing a retailer to confirm that a cheque would be honored when used at a point of sale. The drawer would sign the cheque in front of the retailer, who would compare the signature to the signature on the card and then write the cheque-guarantee-card number on the back of the cheque. Such cards were generally phased out and replaced by debit cards, starting in the mid-1990s.

From the mid-1990s, many countries enacted laws to allow for cheque truncation, in which a physical cheque is converted into electronic form for transmission to the paying bank or clearing-house. This eliminates the cumbersome physical presentation and saves time and processing costs.

In 2002, the Eurocheque system was phased out and replaced with domestic clearing systems. Old Eurocheques could still be used, but they were now processed by national clearing systems. At that time, several countries took the opportunity to phase out the use of cheques altogether. As of 2010, many countries have either phased out the use of cheques altogether or signaled that they would do so in the future.

Parts of a cheque

The four main items on a cheque are:

Drawer: the person or entity whose transaction account is to be drawn. Usually, the drawer's name and account is preprinted on the cheque, and the drawer is usually the signatory.
Payee: the person or entity who is to be paid the amount.
Drawee: the bank or other financial institution where the cheque can be presented for payment. This is usually preprinted on the cheque.
Amount: the currency amount. The amount and currency (e.g., dollars, pounds, etc.) usually must be written in words and in figures. The currency is usually the local currency, but may be a foreign currency.

As cheque usage increased during the 19th and 20th centuries, additional items were added to increase security or to make processing easier for the financial institution. A signature of the drawer was required to authorize the cheque, and this is the main way to authenticate the cheque. Second, it became customary to write the amount in words as well as in numbers to avoid mistakes and make it harder to fraudulently alter the amount after the cheque had been written. It is not a legal requirement to write the amount in words, although some banks will refuse to accept cheques that do not have the amount in both numbers and words.

An issue date was added, and cheques may become invalid a certain amount of time after issue. In the US and Canada,^[27]^[28] a cheque is typically valid for six months after the date of issue, after which it is a stale-dated cheque, but this depends on where the cheque is drawn. In Australia, a cheque is typically valid for fifteen months of the cheque date.^[29] A cheque that has an issue date in the future, a post-dated cheque, may not be able to be presented until that date has passed. In some countries writing a post dated cheque may simply be ignored or is illegal. Conversely, an antedated cheque has an issue date in the past.

A cheque number was added and cheque books were issued so that cheque numbers were sequential. This allowed for some basic fraud detection by banks and made sure one cheque was not presented twice.

In some countries, such as the US, cheques may contain a memo line where the purpose of the cheque can be indicated as a convenience without affecting the official parts of the cheque. In the United Kingdom a memo line is not available and such notes may be written on the reverse side of the cheque.

In the US, at the top (when cheque oriented vertically) of the reverse side of the cheque, there are usually one or more blank lines labelled something like "Endorse here".

Starting in the 1960s, machine-readable routing and account information was added to the bottom of cheques in MICR format, which allowed automated sorting and routing of cheques between banks and led to automated central clearing facilities. The information provided at the bottom of the cheque is country-specific and standards are set by each country's cheque clearing system. This means that the payee no longer has to go to the bank that issued the cheque, they can instead deposit it at their own bank or any other bank and the cheque would be routed back to the originating bank, and funds transferred to their own bank account.

In the US, the bottom 5⁄8-inch (16 mm)^[30] of the cheque is reserved for MICR characters only. Intrusion into the MICR area can cause problems when the cheque runs through the clearinghouse, requiring someone to print an MICR cheque correction strip^[31] and glue it to the cheque. Many new ATMs do not use deposit envelopes and actually scan the cheque at the time it is deposited and will reject^[32] cheques due to handwriting incursion which interferes with reading the MICR. This can cause considerable inconvenience as the depositor may have to wait days for the bank to be open and may have difficulty getting to the bank even when they are open; this can delay the availability of the portion of a deposit which their bank makes available immediately as well as the balance of the deposit. Terms of service for many mobile (cell phone camera) deposits also require the MICR section to be readable. Not all of the MICR characters have been printed at the time the cheque is written, as additional characters will be printed later to encode the amount; thus a sloppy signature could obscure characters that will later be printed there. Since MICR characters are no longer necessarily printed in magnetic ink and will be scanned by optical rather than magnetic means, the readers will be unable to distinguish pen ink from pre-printed magnetic ink; these changes allow cheques to be printed on ordinary home and office printers without requiring pre-printed cheque forms, allow ATM deposit capture, allow mobile deposits, and facilitate electronic copies of cheques.

For additional protection, a cheque can be crossed, which restricts the use of the cheque so that the funds must be paid into a bank account. The format and wording varies from country to country, but generally two parallel lines may be placed either vertically across the cheque or in the top left hand corner. In addition the words 'or bearer' must not be used, or if pre-printed on the cheque must be crossed out on the payee line. If the cheque is crossed with the words 'Account Payee' or similar then the cheque can only be paid into the bank account of the person initially named as the payee, thus it cannot be endorsed to a different payee.

Attached documents

Cheques sometimes include additional documents. A page in a chequebook may consist of both the cheque itself and a stub or counterfoil – when the cheque is written, only the cheque itself is detached, and the stub is retained in the chequebook as a record of the cheque. Alternatively, cheques may be recorded with carbon paper behind each cheque, in ledger sheets between cheques or at the back of a chequebook, or in a completely separate transaction register that comes with a chequebook.

When a cheque is mailed, a separate letter or "remittance advice" may be attached to inform the recipient of the purpose of the cheque – formally, which account receivable to credit the funds to. This is frequently done formally using a provided slip when paying a bill, or informally via a letter when sending an ad hoc cheque.

Usage

Parties to regular cheques generally include a drawer, the depositor writing a cheque; a drawee, the financial institution where the cheque can be presented for payment; and a payee, the entity to whom the drawer issues the cheque. The drawer drafts or draws a cheque, which is also called cutting a cheque, especially in the US. There may also be a beneficiary—for example, in depositing a cheque with a custodian of a brokerage account, the payee will be the custodian, but the cheque may be marked "F/B/O" ("for the benefit of") the beneficiary.

Ultimately, there is also at least one endorsee which would typically be the financial institution servicing the payee's account, or in some circumstances may be a third party to whom the payee owes or wishes to give money.

A payee that accepts a cheque will typically deposit it in an account at the payee's bank, and have the bank process the cheque. In some cases, the payee will take the cheque to a branch of the drawee bank, and cash the cheque there. If a cheque is refused at the drawee bank (or the drawee bank returns the cheque to the bank that it was deposited at) because there are insufficient funds for the cheque to clear, it is said that the cheque has been dishonoured. Once a cheque is approved and all appropriate accounts involved have been credited, the cheque is stamped with some kind of cancellation mark, such as a "paid" stamp. The cheque is now a cancelled cheque. Cancelled cheques are placed in the account holder's file. The account holder can request a copy of a cancelled cheque as proof of a payment. This is known as the cheque clearing cycle.

Cheques can be lost or go astray within the cycle, or be delayed if further verification is needed in the case of suspected fraud. A cheque may thus bounce some time after it has been deposited.

Following concerns about the amount of time it took the Cheque and Credit Clearing Company to clear cheques, the United Kingdom Office of Fair Trading set up a working group in 2006 to look at the cheque clearing cycle. Their report said that clearing times could be improved, but that the costs associated with speeding up the cheque clearing cycle could not be justified considering the use of cheques was declining.^[33] However, they concluded the biggest problem was the unlimited time a bank could take to dishonour a cheque. To address this, changes were implemented so that the maximum time after a cheque was deposited that it could be dishonoured was six days, what was known as the "certainty of fate" principle.

An advantage to the drawer of using cheques instead of debit card transactions is that they know the drawer's bank will not release the money until several days later. Paying with a cheque without adequate funds backing it and later making a deposit to the account on which the cheque is drawn in order to cover the cheque amount is called "kiting" or "floating" and is generally illegal in the US, but applicable laws are rarely enforced unless the drawer uses multiple chequing accounts with multiple institutions to increase the delay or to steal funds.

Declining use

Cheque usage has been declining since the 1990s, both for point of sale transactions (for which credit cards, debit cards or mobile payment apps are increasingly preferred) and for third party payments (for example, bill payments), where the decline has been accelerated by the emergence of telephone banking, online banking, and mobile banking. Being paper-based, cheques are costly for banks to process in comparison to electronic payments, so banks in many countries now discourage the use of cheques, either by charging for cheques or by making the alternatives more attractive to customers. In particular the handling of money transfer requires more effort and is time-consuming. The cheque has to be handed over in person or sent through mail. The rise of automated teller machines (ATMs) means that small amounts of cash are often easily accessible, so that it is sometimes unnecessary to write a cheque for such amounts instead. A number of countries have announced or have already completed the end of cheques as a means of payment.^[2]^[3]

Decline in Asia

In many Asian countries cheques were never widely used and generally only used by the wealthy, with cash being used for the majority of payments except for India where cheque usage was prevalent. Where cheques were used they have been declining rapidly, by 2009 there was negligible consumer cheque usage in Japan, South Korea and Taiwan. This declining trend was accelerated by these developed markets advanced financial services infrastructure. Many of the developing countries in Asia have seen an increasing use of electronic payment systems, 'leap-frogging' the less efficient chequing system altogether.^[34]

Decline in Europe

In most European countries, cheques are now rarely used or have been completely phased out, even for third party payments except for the United Kingdom, France and Ireland. In most western European countries, it was standard practice for businesses to publish their bank details on invoices, to facilitate the receipt of payments by giro. Even before the introduction of online banking, it has been possible in some countries to make payments to third parties using ATMs, which may accurately and rapidly capture invoice amounts, due dates, and payee bank details via a bar code reader to reduce keying. In using a cheque, the onus is on the payee to initiate the payment, whereas with a giro transfer, the onus is on the payer to effect the payment.

In the United Kingdom, France and Ireland cheques continued to be used as cheque payments were free for the consumer. However these countries have also seen significant declines since 2000. Since 2001, businesses in the United Kingdom made more electronic payments than cheque payments. The UK Payments Council announced in 2011 that cheques would continue as long as customers needed them reversing a previous target to phase out cheques by 2018.^[35]

France, remains well ahead of its European counterparts in the use of cheque payments, as seen in 2020 where it is estimated that more than 1 billion cheque payments were made, compared to Italy, the country with the next highest number of payments, with under 100 million.^[36]

Decline in North America

The United States relied heavily on cheques, due to the convenience it affords payers, and due to the absence of a high volume system for low value electronic payments.^[37] In the US, an estimated 18.3 billion cheques were paid in 2012, with a value of $25.9 trillion.^[38] However even in the United States cheque usage has seen significant decline.

Canada's usage of cheques is less than that of the US and is declining rapidly at the urging of the Canadian Banking Association.^[39] The Government of Canada claims it is 6.5 times more expensive to mail a cheque than to make a direct deposit. The Canadian Payments Association reported that in 2012, cheque use in Canada accounted for only 40% of total financial transactions.^[40]

Decline in Oceania

Both Australia and New Zealand were heavy users of cheques during the later part of the 20th century. However, following global trends both countries have seen significant decline in the use of cheques.

In Australia, following global trends, the use of cheques continues to decline. In 1994 the value of daily cheque transactions was A$25 billion; by 2004 this had dropped to only A$5 billion, almost all of this for B2B transactions. Personal cheque use is practically non-existent thanks to the longstanding use of the EFTPOS system, BPAY, electronic transfers, and debit cards. The Australian payment systems strategic plan has said it will remove cheques by 2030.^[41]

In New Zealand, payments by cheque have declined since the mid-1990s in favour of electronic payment methods and were phased out completely in 2020. In 1993, cheques accounted for over half of transactions through the national banking system, with an annual average of 130 cheques per capita. By 2006 cheques lagged well behind EFTPOS (debit card) transaction and electronic credits, making up only nine per cent of transactions, an annual average of 41 cheque transaction per capita.^[42] Most retail stores no longer accept cheques; those that do often require government-issued identification or a store-issued "cheque identification card" before they can be accepted as payment.

Alternatives to cheques

Payment systems other than cheques include:

Cash
Debit card payments
Credit card payments
Direct debit (initiated by payee)
Direct credit (initiated by payer), ACH in US, giro in Europe, Direct Entry in Australia
Wire transfer (local and international) via banks and credit unions or else via major private vendors such as Western Union and MoneyGram
Electronic bill payments using Internet banking
Online payment services, e.g. WeChat Pay, Alipay, PayPal, Venmo, Unified Payments Interface, PhonePe, Paytm and Worldpay
Money orders or postal orders

Variations on regular cheques

In addition to regular cheques, a number of variations were developed to address specific needs or address issues when using a regular cheque.

Cashier's cheques and bank drafts

Cashier's cheques and banker's drafts, also known as bank cheques, banker's cheques or treasurer's cheques, are cheques issued against the funds of a financial institution rather than an individual account holder. Typically, the term cashier's check is used in the US and banker's draft is used in the UK and most of the Commonwealth. The mechanism differs slightly from country to country but in general the bank issuing the cheque or draft will allocate the funds at the point the cheque is drawn. This provides a guarantee, save for a failure of the bank, that it will be honoured. Cashier's cheques are perceived to be as good as cash but they are still a cheque, a misconception sometimes exploited by scam artists. A lost or stolen cheque can still be stopped like any other cheque, so payment is not completely guaranteed.

Certified cheque

When a certified cheque is drawn, the bank operating the account verifies there are currently sufficient funds in the drawer's account to honour the cheque. Those funds are then set aside in the bank's internal account until the cheque is cashed or returned by the payee. Thus, a certified cheque cannot "bounce", and its liquidity is similar to cash, absent failure of the bank. The bank indicates this fact by making a notation on the face of the cheque (technically called an acceptance).

Payroll cheque

A cheque used to pay wages may be referred to as a payroll cheque. Even when the use of cheques for paying wages and salaries became rare, the vocabulary "pay cheque" still remained commonly used to describe the payment of wages and salaries. Payroll cheques issued by the military to soldiers, or by some other government entities to their employees, beneficiants, and creditors, are referred to as warrants.

Warrants

Warrants look like cheques and clear through the banking system like cheques, but are not drawn against cleared funds in a deposit account. A cheque differs from a warrant in that the warrant is not necessarily payable on demand and may not be negotiable.^[43] They are often issued by government entities such as the military to pay wages or suppliers. In this case they are an instruction to the entity's treasurer department to pay the warrant holder on demand or after a specified maturity date.

Traveller's cheque

A traveller's cheque is designed to allow the person signing it to make an unconditional payment to someone else as a result of paying the issuer for that privilege. Traveller's cheques can usually be replaced if lost or stolen, and people frequently used them on holiday instead of cash as many businesses used to accept traveller's cheques as currency. The use of credit or debit cards has begun to replace the traveller's cheque as the standard for vacation money due to their convenience and additional security for the retailer. As a result, many businesses no longer accept traveller's cheques.

Money or postal order

A cheque sold by a post office, bank, or merchant such as a grocery store for payment in favour of a third party is referred to as a money order or postal order. These are paid for in advance when the order is drawn and are guaranteed by the institution that issues them and can only be paid to the named third party. This was a common way to send low value payments to third parties, avoiding the risks associated with sending cash by post, prior to the advent of electronic payment methods.

Oversized cheques

Oversized cheques, also commonly referred to as novelty cheques, are often used in public events such as donating money to charity, announcing government grants,^[44] or giving out prizes such as those from lotteries or Publishers Clearing House sweepstakes. The cheques are commonly 18 by 36 inches (46 cm × 91 cm) in size;^[45] however, according to the Guinness Book of World Records, the largest ever is 12 by 25 metres (39 ft × 82 ft).^[46] Until recently,^[when?]^{[citation needed]} regardless of the size, such cheques could still be redeemed for their cash value as long as they would have the same parts as a normal cheque, although usually the oversized cheque is kept as a souvenir and a normal cheque is provided.^[47] Any bank could levy additional charges for clearing an oversized cheque. Most banks need to have the machine-readable information on the bottom of cheques read electronically, so only very limited dimensions can be allowed due to standardised equipment.

Payment vouchers

In the US some public assistance programmes such as the Special Supplemental Nutrition Program for Women, Infants and Children, or Aid to Families with Dependent Children make vouchers available to their beneficiaries, which are good up to a certain monetary amount for purchase of grocery items deemed eligible under the particular programme. The voucher can be deposited like any other cheque by a participating supermarket or other approved business.

Cheques around the worldedit

Australiaedit

The Australian Cheques Act 1986 is the body of law governing the issuance of cheques and payment orders in Australia. Procedural and practical issues governing the clearance of cheques and payment orders are handled by Australian Payments Clearing Association (APCA).

In 1999, banks adopted a system to allow faster clearance of cheques by electronically transmitting information about cheques; this brought clearance times down from five to three days. Previously, cheques were required to be physically transported to the paying bank before processing began, and dishonoured cheques were physically returned.

In June 2023 the Australian government announced it was moving to phase out the use of cheques by 2030.^[3]

Canadaedit

In Canada, cheques standards and processing are overseen by Payments Canada.^[48]^[49] Canadian cheques can legally be written in English, French or Inuktitut. For a period Canada also had a tele-cheque, which was a paper payment item that resembles a cheque except that it is neither created nor signed by the payer—instead it is created (and may be signed) by a third party on behalf of the payer. Under CPA Rules these were prohibited in the clearing system effective 1 January 2004.^[50]

Canada's usage of cheques is less than that of the US and has been declining rapidly at the urging of the Canadian Banking Association since 2000.^[51] The Government of Canada claims it is 6.5 times more expensive to mail a cheque than to make a direct deposit. The Canadian Payments Association reported that in 2012, cheque use in Canada accounted for only 40% of total financial transactions.^[52] The Interac system, which allows instant fund transfers via chip or magnetic strip and PIN, is widely used by merchants to the point that few brick and mortar merchants accept cheques.

The Canadian government began phasing out all government cheques from April 2016.^[53]

Indiaedit

Cheques were first used in India by the Bank of Hindustan, the first joint stock bank established in 1770. In 1881, the Negotiable Instruments Act (NI Act)^[54] was enacted in India, formalising the usage and characteristics of instruments like the cheque, the bill of exchange, and promissory note. The NI Act provided a legal framework for non-cash paper payment instruments in India.^[25] In 1938, the Calcutta Clearing Banks' Association, which was the largest bankers' association at that time, adopted clearing house.^[25]

Beginning in 2010, the Reserve Bank of India (RBI) along with the National Payments Corporation of India (NPCI) piloted the cheque truncation system (CTS). Under CTS, cheques are no longer physically transported to different clearing houses. They are processed at the bank where they are presented, where an image of the cheque using Magnetic ink character recognition (MICR) is captured and digitally transmitted.^[55]^[56]

In 2009 cheques were still widely used as a means of payment in trade, and also by individuals to pay other individuals or utility bills. One of the reasons was that banks usually provided cheques for free to their individual account holders. However, cheques are now rarely accepted at point of sale in retail stores where cash and cards are payment methods of choice. Electronic payment transfer continued to gain popularity in India and like other countries this caused a subsequent reduction in volumes of cheques issued each year. In 2009 the Reserve Bank of India reported there was a five percent decline in cheque usage compared to the previous year.^{[citation needed]} In 2019, the Reserve Bank of India reported that while cheque usage continued to decline, the decrease was slow. The bank attributed the slow pace of the decline due to the fact that cheque volume had briefly increased after demonetisation in 2016 before continuing to fall, as well as the efficiency of India's cheque clearing system.^[57]

Israeledit

Zdroj:https://en.wikipedia.org?pojem=Bank_cheques
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