(I’m not sure if this was covered in the other ref’d thread.)
Most of this thread seems to be on why/if endorsing is required for the recipient/payee.
Endorsement is good for me, as the issuer, because it serves as a proof a payment. My bank sends processed checks back to me and, with the payees signature or stamp on the back, serves as proof of payment and also affixes a date to it.
A few times we have had utilities deny we made a payment, and producing the cashed check, with their endorsement on the back, served to convince them we had made the payment.
People do endorse cheques in Australia. I’ve done it.
Because I can then pay the cheque on to a third party e.g.
Person A writes a cheque to me for $100. I also owe $100 to person C.
Instead of depositing A’s cheque into my account, awaiting its clearance, and then writing another cheque to C, I can endorse the cheque to C. C then deposits the cheque straight into his account. It never goes anywhere near my bank account.
clarobscur, I’m curious. What does the restrictive language say (translated to English, please) which makes the cheque non-transferable and non-cashable? Not doubting this is done, by any means. Honestly, just curious how they do it. And why, if you know.
This also confuses me- they send the processed cheques back to you??? Why? (Presumably you get a payment receipt from the company, right?) I can see so many opportunities for fraud there I don’t even know where to begin.
Cuncator, I asked at the bank the other day about endorsing a cheque using the scenario you outlined, and they said they wouldn’t allow it. If your name wasn’t on the cheque, you couldn’t cash it or deposit it (unless you were depositing it into the appropriately named account). So, in the scenario you were describing, person C would just have to wait until your cheque from Person A cleared, then you could either give them the cash or write a new cheque/money order.
Maybe different banks have different rules? I’ve certainly never come across a cheque that needed endorsing in the years I’ve been living here.
That doesn’t surprise me, but I think it says quite a bit that the bank staff were unfamiliar with the procedure; it’s clearly not something that’s done much anymore.
I don’t know about the French situation, but Australian cheques are preprinted as:
Pay name of person or company OR BEARER
the sum of amount in written longhand, amount in numerals.
The “OR BEARER” part is the tricky bit. Theoretically, anybody could cash it, but I’ve never seen this done - most people who want this to happen just make out the cheque with the word CASH where the person’s name would normally be. If the cheque is to be deposited into a bank account only, then we strike it through with two vertical lines, and the words “NOT NEGOTIABLE” written between the lines. For handwritten cheques the two lines alone without the wording have the same meaning.
I don’t think many banks actually bother with sending the actual physical checks back any more, although that used to be the way it was done. These days I just view images of them online, but I can always print them if I need a physical copy. I also get copies of the images mailed to me in my monthly statement.
The checks or check images are handy for resolving disputes where you’ve mailed a check but never got a receipt, either because the company doesn’t issue them or because they should have but managed to “lose” your payment.
I can’t think of any form of fraud that it would lead to, though, and I’ve never heard of any scams using them. The processed check is being returned to the person who issued it, and I guess I don’t see how that would be useful for fraud.
Here’s an Australian cheque crossed not negotiable. This one’s a “bank cheque” which means it’s drawn from the bank itself and can be cashed straight away (a bit like a money order). There’s also a thing on this one that might make the Americans giggle (it makes Australians not from Melbourne giggle too).
[QUOTE=TheLoadedDog]
Generally, you have to put it into an account. However, there are exceptions. In many places, the local pub will be able to bank cheques
My local has a sign:
I don’t cash cheques and my bank doesn’t sell booze, this suits us both just fine
I think this bit “OR BEARER” is where we are not understanding each other. My checks in the USA do not have this. If I write a check to Bob, he can deposit it in his account with or without endorsement. If he cashes it, he must endorse it on the back which is saying I, Bob have presented this check for cash. He will probably have to show ID, give a fingerprint or both. If he wants to hand off my check to Charlie, he endorses it and hands it to Charlie. This is risky for Charlie, because if the check is bad, he’ll have to go after Bob and, ultimately, me for the money ( I think). If Charlie wants to deposit my check, he can endorse it or not, but he’ll need to endorse it if he wants to present it for cash. If the check is made out to Bob, Charlie cannot deposit (into Charlie’s own account) or cash the check without Bob’s signature.
The only time I have seen “or Bearer” on a check is on a small rebate check, from a manufacturer.
Is it the Batman street part that makes people giggle?
That is the tricky bit. American checks don’t have that bit.
In America, I write a check to Thomas Atkins, payable at my bank.
It is a “bearer instrument”. Only Thomas Atkins can cash it, and only at my bank.
When he endorses it, it becomes a “negotiable instrument”, essentially the same as cash. Anyone can cash it, including his bank.
So he endorses it, and his bank trades it for cash. Then his bank takes it to my bank, and my bank pays his bank. My bank then cancels the check, and returns the cancelled check to me.
Or, we can make out the check to “cash” to achieve the “or bearer” effect. Apparently, Australians do this, too, which seemingly makes the “BEARER” part redundant.
BTW, if checks made out to “cash” don’t require endorsement, that’s apparently news to BofA, since I had that one made out to cash bounced from ATM deposit because they thought I hadn’t endorsed it. Logically, an endorsement on a check made out to cash gives you some idea of who the money was forked over to. Pre-ATM, writing a check to “cash” was the SOP for withdrawing money from your account, and people did it a lot more.
We’ve strayed a bit from the OP and, unfortunately, I don’t have time to comment on all responses. What I’d like to point out, though, is that some folks are using the terms almost-but-not-quite correctly. For example, a bearer check (at least in the US) does not require endorsement to be paid. It’s transferred by delivery, the same as cash. OTOH, a check payable to a named person can be transferred only by assignment, usually an endorsement. Endorsement is not a receipt or acknowledgment. It’s a transfer. Perhaps the confusion arises because a check payble to a named person endorsed “in blank” becomes a bearer instrument, i.e., can be presented by anyone having possession.
Non-negotiable, btw, is not the same as non-transferable. The distinction has to do with the defenses available to payment. To simplify, a negotiable instrument is treated more-or-less as cash, subject mainly to defenses related to fraud. An instrument merely transferable is subject to whatever defenses the payer may have in the underlying transaction. For this reason, US banks are hesitant to accept non-negotiable checks. It greatly increases their risk of making funds available to the person depositing the check.
In Australia, a cheque from one bank made out to Fred Bloggs can be deposited at any bank that Mr. Bloggs has an account with. It doesn’t matter that the drawer might be writing the cheque from an account at WestPac while Fred banks with ANZ; all Fred has to do is deposit the cheque into his account and 3 working days later the money is his.
This does explain why you might need to endorse cheques in the US, though- especially if the cheque is drawn from an obscure bank and the payee has an account with Wells Fargo or Bank of America or someone like that.
An American check is a non-negotiable instrument by default, which is made negotiable by the endorsement of the payee.
An Australian cheque is a negotiable instrument by default, which can be made non-negotiable by the payer.
In other words, both countries have both types of checks/cheques. It is just a difference in procedure as to how a check/cheque is made one type or the other.
Can you please expand on this (ie. explain it in simple terms for me, Joe Idiot, because I don’t get it):
We are both in the US for the purposes of this. I install a new widget in your house, and you pay me for my services with a non-negotiable check. Now to my mind, this just means that I have to put it into my bank account, rather than give it to my flatmate Dave to spend up on booze. Fine, I was going to do that anyway. But how does it put the bank at risk? If I’m going there myself to deposit it in person, then it’s my account anyway, so no drama. If I send a friend to deposit it ito my account, is there a problem?
