cheque

Cheques are written orders that instruct a bank to pay a specified amount from the drawer's account to a named payee or to bearer. A cheque functions as a negotiable instrument; its key parties are the drawer, the drawee bank, and the payee. The cheque must be signed by the drawer and typically includes the date, the amount in figures and in words, and the name of the payee. A cheque can be endorsed to transfer the right to receive payment to another person.

A cheque may be crossed, indicating it should be deposited to a bank account and not paid in cash, or may be counter-signed if it is a bearer cheque to be paid to whoever presents it. The cheque becomes payable on demand, or at some future date if post-dated, but many jurisdictions treat post-dating with restrictions.

Processing involves presentment by the payee to the drawer's bank, verification of funds, and forwarding to the drawee bank for payment in the clearing system. Cheques today often include a Magnetic Ink Character Recognition (MICR) line to aid processing. A cheque that is not paid within a certain period is considered stale and may be dishonoured.

Legally, cheques are governed as negotiable instruments in many jurisdictions, such as the Bills of Exchange Act in the United Kingdom and corresponding laws elsewhere. With the growth of electronic payments, cheque usage has declined in many countries, though it remains in use in several regions for personal and business transactions.