Means of payment: checks


A check is a document used as a means of payment by which a person (the drawer) orders a bank (the drawee) to pay a certain amount of money to another person or company (the beneficiary or holder). The drawer can also be the beneficiary, as happens when you use a check to withdraw money from your own account.

Check modalities

Personal check: is one issued against the current account of a natural or legal person (company). Current account holders are given a personalized checkbook with printed checks that they can use as a means of payment, and which include:

The check number and identification code.

The CCC (Client Account Code) that classifies the account.

The use of personal checks as a means of payment has decreased with the appearance of other more convenient ones, such as credit cards and online banking, but above all due to the inconveniences that make collection difficult.

To make the payment of a personal check effective, it is necessary that the drawer has the fundsnecessary in the entity that appears as drawee. In other words, if someone pays you with a personal check, you have no guarantee of being able to cash it. If the drawer doesn’t have sufficient money in his account, the bank won’t pay it and you need to claim the payment. The entities also charge high commissions for each check returned for insufficient funds.

Even when there are sufficient funds, if the check is not cashed in the same entity as the drawee (even in the same branch), the payee will have to pay a commission.

Finally it must be mentioned the problems related to security. There is the possibility of fraud due to forgery or alteration of the check, which can harm both the issuer of the check and the person who intends to collect it.

Conformed check: it is a form of personal check in which the bank that has to pay (the drawee) ensures that there are funds and that therefore it will be paid. To assure the operation, the bank recalls that amount from the account of the drawer, on top of the commission that use to be usually priced for that service. The entity writes the word conformed, certified or other similar term on the check and signs it.

Many creditors require payments by conformed checks.

Bank check: is the one in which the drawer (the one who signs the check) is the bank itself that must pay it (the drawee). It is not necessary to have a current account in the entity to buy this service in case of having to use it as a means of payment.

Check against the Bank account: it is the one in which the drawee is your Bank. Normally the drawer is a credit institution. These last two types, like the conformed check, reinforce the guarantees of the document.

Counter check: also called a cashier’s check, it is one issued by a bank to its own dependencies. In reality it is not a means of payment, but a receipt. It is a document that the customer signs as proof that they have received cash from their own account from the window.

Traveller’s check: it is the one that can be exchanged for cash and used as a means of payment in most of the world. It is not related to a checking account or bank check or cheap checks online, but is paid as a service at the time of receipt.

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