How to Cash a Crossed Check

In conclusion, account payee cheques serve as a crucial tool for secure and targeted payments. By restricting the deposit and usage of the cheque to the designated payee's account, they offer enhanced protection against fraud and unauthorised transactions. Whether used for unfamiliar transactions or in online marketplaces, account payee cheques provide peace of mind and ensure that payments reach their intended recipients. An account payee cheque, also known as a "crossed cheque," is a type of cheque that is specifically designed to be deposited into the account of the person or entity that the cheque is made out to.

  1. Having explained the meaning of account payee cheque, let us assess its features.
  2. A person who signs the cheque and transfers the instrument is an endorser and in whose favor it is transferred is endorsee.
  3. In case of a crossed cheque, the payee is free to make further endorsements.
  4. In this aspect, the representative is acting as the fiduciary to the actual payee.
  5. All you need to know about the meaning and usage of an account payee cheque.

A payee is a party in an exchange of goods or services who receives payment. The payee is paid by cash, check, or another transfer medium by a payer. The name of the payee is included in the bill of exchange and it usually refers to a natural person or an entity such as a business, trust, or custodian.

This form of the cheque has comparable properties to a bearer cheque, but one cannot endorse it simply by giving it over to somebody else. The primary factor for the popularity of drafting an account payee cheque is that this is the safer type of cheque. The APC is a super security form of cheque since one can put money only into the payee's accounts, and the recipient does not have permission to mark this cheque for anybody else.

In any type of transaction, there will be a party that provides the goods or services and the party that receives the goods or services. To receive goods or services a payer must provide an exchange of value, which is most often money, to the payee. Except if the phrase bearer is cross or there is any other kind of mark, each cheque is just a bearer's cheque. The individual holding the cheque can redeem it across the countertop. Furthermore, there is no requirement of endorsing these cheques, and they may be quickly given to a 3rd party.

If you are depositing an issued cheque in your account, you must write your name, account number and phone number on the flip side of the cheque. You must also fill out a deposit slip on which you must mention your name, account number, the cheque amount (in words and figures), the name of the drawee bank, and your signature. You might come across cheques during business dealings or when taking a business loan. Albeit being old school, writing cheques is one of the safest and most convenient ways to make a payment. In order to use a cheque, one needs a savings bank account to issue a cheque in their own name.

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To begin, complete the cheque deposit form with all of your information. Clip that to the cheque and hand it over to the customer service agent or place it inside the cheque deposit box. Within some days, the bank will transfer the money to your account. A crossed check is one that includes two parallel lines through the top-left corner or across the entire check.

iii) Payee

However, there will still be unexpected situations where you need to issue a cheque or receive one. The drawee is the person or organisation to whom a cheque is made payable. Typically, the banks are the drawee and are given instructions by the drawers to withdraw the funds.

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You will have to provide the cheque, your ID proof and fill the required details in the encashment slip. The bank will then verify your details and after the clearance, the cash will be handed to you. It is important to double-check the name, amount, and date before signing the cheque, as any errors may cause the cheque to be returned or delay the process of funds transfer. Additionally, it is advisable to use a pen with blue or black ink, as it is easier to read and less likely to be altered. By following these simple steps, you can be sure that your account payee cheque will be processed safely and efficiently. While paying someone via cheque you always want to make sure that it goes to the person’s bank account.

The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision. In a banking situation, the payee must have an active account that is in good standing through which funds can be transmitted by the payer.

Although this form of cheque has properties similar to bearer cheques, it can’t be endorsed by simply giving it to another person. Therefore, in an account payee cheque, the bank only transfers funds into the payee’s accounts to complete the payment. Social Security and Supplemental Security Income (SSI) benefit payments are often payable to a “representative payee” rather than the ultimate beneficiary (the person entitled to receive benefits). The Social Security Administration (SSA) may designate a representative payee if it believes the beneficiary can’t manage funds on their own. This typically happens in electronic transfers when a person withdraws money from the payer's account and splits it into a variety of payee allocations. Depending on the banking institution, these types of transactions may have approval requirements for numbers, percentages, and types of accounts.

Payers usually have to pay a penalty fee for the bounced cheque. After writing the name you must remember to cross out any extra spaces between the name by drawing the line. All information is subject to specific conditions | © 2023 Navi Technologies Ltd. Urban Money is India’s one of the unbiased loan advisor for best deals in loans and unmatched advisory services. We manage the entire borrowing process for clients, starting by assisting our clients to choose the right product from the appropriate lending organization,till the time, the entire loan is disbursed. Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

You must write the intended payee’s name, the payment amount (in words and figures), the date of issue, and sign the cheque. The amount written on the cheque will be paid only to the person whose name is written on it. The biggest advantage of this is that in case of loss of cheque, a fraudster cannot take the cash in return by pretending to be the target person. It also decreases the chances of misuse of the cheque as the amount will be paid to the account of the payee only. In the digital era, the transactions are shifting from physical to online modes, like UPIs, Online banking, etc.

Now that you know the meaning of account payee cheques, you can now securely issue them to your recipients. To track the funds in your account at any time, you should consider opening a that provides instant access to your bank statement, transaction history, and more. Cheques are referred to as crossed cheques when the A/C payee is not written between the lines placed at the corners of a cheque. The back of the crossed cheque can be signed to obtain cheque endorsing assistance.

Investment management transactions frequently have payee accounts that receive payments for the benefit of a client's separate account. This would appear as "XYZ Management FBO John Smith." The funds will ultimately be deposited into John Smith's account as the payee, with XYZ Management being the custodian. Regarding the signature, a/c payee an account payee cheque differs from a crossover cheque and the order cheque, but it is opposed to holder verification. A holder cheque is perhaps the most prone to fraud, but an APC is a very safe document. It is essential to understand the various methods of drawing the line on cheques to fulfil the proper task.

In case of a crossed cheque, the payee is free to make further endorsements. This crossed cheque is no more a bearer cheque where anyone can negotiate and get payment across the counter. The drawer is the entity or the account holder who is writing the cheque and signs on the cheque.

Differences Between Account Payee Cheques And Other Payment Methods

This is a type of cheque in which the bank deposits the amount directly into the payee's account. Nevertheless, in this type of cheque, the payee can give the approval or authorisation for the third party, and further, the third person can recommend it to somebody else. You can complete such recommendations by mentioning the endorsee's name on the cheque and providing your signature on the reverse side of the cheque. The account payee cheque secures your transfer as the payment can only be deposited in the payee's account.

Funds must be spent on (or saved for) only in ways that help the beneficiary. In this aspect, the representative is acting as the fiduciary to the actual payee. The SSA outlines an entire process on how to become a representative payee, what the duties are, and how the process should be managed and reported. Deposit the cheque at your banks’s ATM and take a photo/video of the process, or with a bank teller. The most crucial thing while writing a cheque is, you must not leave spaces between the words and the numbers.