Furthermore, there is no requirement of endorsing these cheques, and they may be quickly given to a 3rd party. Add a/c payee (only) to one of your lists below, or create a new one. To add a/c payee (only) to a word list please sign up or log in.
How to Cross a Cheque?
When your bank follows the instruction and pay the cash to the person whose name mentioned on cheque or to the bearer of cheque then it is called as “cheque is honored”. I know whoever have bank account might have came across these two words while writing cheque or interacting with the bank. But do you know the difference between these two and how and at what time one must opt for these two facilities of writing cheque?
Many times people also write Account Payee or A/C Payee in between these lines drawn on the cheque. The amount filled in the check will be transferred only to the account of the person in whose name the check has been drawn. The biggest advantage of this is that in case of loss of cheque, a fraudster cannot take cash in return by pretending to be the target person.
The bank won’t accept your cheque if any of the information is written incorrectly. There are different types of cheques issued by the banks and let us today know the difference between A/C payee and cheque endorsement. To fill an account payee cheque, first enter all required information on the regular cheque, including the payee’s name, amount (in words and figures), date and your signature. Then, draw two parallel lines diagonally on the upper-left corner and write “Account Payee only” or “A/C Payee”. Account payee cheques impart an extra layer of security for both the drawer (check issuer) and the payee (beneficiary of the cheque). It authorises only one person to withdraw funds and prevents anyone from writing additional details without the drawer’s permission.
Crossed Cheque vs. A/C Payee Cheque
No, these cheques are highly secure and cannot be encashed by anyone. The amount will be deposited in the recipient’s bank account only. The meaning of a crossed check means that it can only be deposited within a bank account. An account payee cheque is different from a regular one due to the reason that you cannot withdraw cash through it. Also, nobody else can deposit it other than the recipient of the funds. The amount filled in the Cheque will be transferred only to the account of the person in whose name the Cheque has been drawn.
You should write a letter to the bank clearly mentioning all necessary details regarding your cheque, so that your cheque can be spotted and clearing process may stop. If any kind of overwriting, scribbling or cutting happens in a cheque preparation process. It is always a good practice to cancel the existing cheque and write a fresh cheque carefully. The practice of writing “A/C Payee” cheques significantly protects the misuse of the cheque. And, it provides an added layer of security in the cheque transaction. But many times people end up writing cheques loosely, which leads to major fraud and cheating.
Let us look at some of the common mistakes that you need to avoid when dealing with a/c payee cheques. If you are a recipient of an a/c payee cheque, knowing how to deposit it is essential to getting the funds credited to your account. Here is a detailed guide on how to make an account payee cheque deposit. An account payee cheque transaction involves four parties, with each of them playing a crucial role. Let us look at the parties involved in the a/c payee cheque payment process.
- Hope you have found better clarity in the rules and guidelines to be followed before writing cheques.
- The amount will be deposited in the recipient’s bank account only.
- The payee is the individual or entity named on the cheque and entitled to receive the funds.
- You will have to provide the cheque, your ID proof and fill the required details in the encashment slip.
A clearing facility receives and processes information and pictures of cheques electronically from banks, and it passes the procedure over to the other bank. As a result, it serves as an intermediate between the banking institutions for cheque clearance. Regarding the signature, 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. This is a type of cheque in which the bank deposits the amount directly into the payee’s account.
Account Payee Cheque
The answer would probably be Writing a cheque is the easiest thing to do, right? But there are many who shy away from asking questions like, how to write a cheque? This type of cheque can be used easily to ensure hassle-free transactions. It helps easily clear your credit card bills or pay loan EMIs.
A bearer cheque allows anyone holding it to cash it, making it less secure but easier to access. A crossed cheque is non-transferable, meaning you cannot endorse or pass it on to a third party. The only permissible action is for the payee to deposit the cheque into a bank account in their name. In the Cheque shown above, “A/C Payee” is written between 2 crossed lines. It ensures that the cheque will be encashed by depositing to payee account. This way, the cheque cannot be endorsed to anybody by a payee.
- Moreover, you can use it to send and receive funds from anyone.
- 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.
- Unlike cash payments, account payee cheques allow you to transfer large amounts without any security concerns.
- The primary feature of an account payee cheque is that the mentioned amount cannot be withdrawn as cash.
Meaning of a/c payee (only) in English
The cheque cannot be endorsed or transferred to anyone else once issued to the payee Issued in the name of a particular payee, ensuring that only the designated recipient receives the funds An order cheque has the term ‘Bearer’ crossed out and the word ‘to Order’. 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. 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.
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It uses two business days for a cheque to get cleared and it takes no longer than 5 days for cheques to get cleared by the bank. The amount will be transferred to the account of the person specified on the cheque. The issuer of the cheque has an account (savings or current) with the bank to which it is connected.
You can use such cheques for the withdrawal of money while traveling. It is equal to carrying cash but you can travel safely without carrying a huge amount. These cheques can be encashed abroad where foreign currency is normally acceptable. Such cheques are issued by the bank itself and guarantee payment.
To encash an account payee cheque, you need to visit the bank where the cheque has been issued, and where the account of the issuer is maintained. 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. This will transfer the ownership of the cheque to Sarah, and she can deposit it into her bank account.
STEP 3: Fill out a Deposit Slip
These cheques build trust in financial transactions, helping create a reliable banking system. Crossed cheques and A/C Payee cheques are important instruments within the banking system that enhance the security, traceability, and controlled transfer of funds. While both restrict the manner in which a cheque may be encashed, they differ in their specific restrictions, usage, and legal implications.
In this situation, the person receiving money with the help of Cheque can get that money transferred to any other account as well. If A/C Payee is not written in between the lines drawn at the corners of the cheque, then this Cheque is called a crossed cheque. The help of Cheque Endorsing can be taken by signing on the reverse of the crossed cheque. But the Cheque cannot be endorsed after writing account payee.
In essence, the legal effect of a/c payee the crossing is to guide the banker regarding the manner of payment and safeguard the payee’s financial rights. So by mere crossing you are no longer making payment to PAYEE ONLY. Also in case of dishonor of cheque (in the above example), Mr.Rohan can sue Mr.Satish and in return Mr.Satish to me and finally I can sue to the drawer of cheque. So drawer is giving instruction to drawee to pay an amount mentioned on the checque to the person named or to the bearer of the checque.
