☑️ WHAT IS CHECK ☑️Check (check - Great Britain, check - USA) is used

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WHAT IS CHECK

Check (check - Great Britain, check - USA) is used for non-cash payments in retail payment turnover. It is an unconditional order of a bank client, who maintains his current account, to pay a certain amount to the bearer of the check, his order or another person indicated in the check.

In the 17th century, the development of banking in countries with a high share of capitalist production (England) contributed to the emergence of checks as an additional medium of circulation and payment.

Checks were originally a bearer bank receipt. This means of payment was actively demanded by the market, since there was a shortage of metallic money, which included precious metals.

Checks legislation came into being much later, in the 19th century. In the UK, checks were equated to bills of exchange and were governed by the Bill of Exchange Act 1882.

In the United States, there is also no separate law on checks, and the circulation of checks is governed by the provisions of the Negotiable Documents Act and the EKC.

In continental European countries, a check is separated from a bill of exchange and is considered a special security for settlements.

The basic principles of using checks as a method of payment for foreign trade transactions were formulated on March 19, 1931 in the Geneva Convention, where the legal regimes of bank checks were unified and the Uniform Check Law was presented.

The countries that signed the convention (primarily, most European countries, with the exception of the UK), have undertaken to apply the Uniform Check Law in their check circulation.

Check legislation determines the form of a check, its main details, rights and responsibilities of participants in check settlements.

The obligatory details of a check under the Geneva Convention include:

The name (check mark)

An order to pay a certain amount of money, not stipulated by any conditions

The name of the paying bank

The place of payment

The date and place of issue of the check

The signature of the drawer

The check can be of any shape and can be written on a plain sheet of paper.

However, banks provide customers with branded check forms.

As a rule, blank check forms are formed into check books and issued to customers.

The bank that maintains the client's accounts has samples of his signature.

When paying for a check, the bank is obliged to check the correctness of filling in the check (check the signature with the available sample).

According to the Geneva Convention, a check must be presented for payment domestically within 8 working days, and abroad within 20 days if the points of presentation of the check and its payment are within the same part of the world (for example, in America or Europe), and 70 days - if in different parts of the world.

The settlement scheme using checks (taking into account the Russian specifics) is shown down below :

The buyer submits to his bank an application for a checkbook and a payment order for depositing funds.

The bank debits funds from the buyer's current account and deposits them in a separate account.

The bank issues a checkbook to the buyer.

The seller ships goods or performs work (renders services).

The buyer writes a check for the goods and hands it to the supplier.

The supplier submits the register of checks to his bank for collection.

The supplier's bank issues checks for collection for payment at the buyer's bank.

The buyer's bank debits the check amount from the deposited amount account.

The buyer's bank transfers funds by check to the supplier's bank.

The supplier's bank credits the funds to the supplier's current account.

The supplier's bank transfers to its client a statement of his current account.

Similarly to a bill of exchange, depending on whose favor the check was issued, one can distinguish:

Personal checks - checks issued to a specific person;

Order checks - checks for which payment to the specified person is carried out in accordance with the order;

Bearer's checks - checks for which payment is made to the bearer of the check.

A personal check is not transferable.

However, an order check is circulated by means of a transfer inscription on the back of the check. Similarly to a bill of exchange, if the holder of the check wants to limit or exclude the possibility of making claims on the check in case of non-payment, he uses the words "without turnover" in the text of the document.

In addition, the holder of the check can indicate on the back the purpose of transferring the check to another person.

This makes it possible to restrict the possibility of receiving money by check, i.e. put the target endorsement.

The bank is responsible for checking the consistency of endorsements, but it is not responsible for their quality, i.e. the bank is not responsible for forging signatures of endorsers.

There are so-called crossed checks , on the face of which two parallel lines are placed.

This means that the amount indicated in the check must be credited to the account of the bearer of the check in this bank or transferred to another bank by bank transfer.

Since it is not possible to get cash from crossed checks, crossing a check makes it difficult to use stolen checks.

There are two types of cross-checking of checks: special, when the exact name of the bank and / or the account number of the recipient of the money is indicated between the lines, and general - without specifying a specific bank where the funds should be transferred

In addition to the surety on the check (aval), there is another possible means that can improve the reliability of the check - the operation of certification of the check (certified check).

The bank with a special inscription certifies the authenticity of the client's signature and the availability of the amount to pay for the check.

The bank is responsible for paying for such a check and cannot refuse to pay it. Certified checks are used where it is important to have the equivalent of cash, such as when dealing with securities.

On a check that is drawn and transferred to another person, you can suspend the payment of money.

To do this, the drawer must submit to the bank a written statement of refusal to pay for the issued check.

This operation is called the suspension of payment by check (stop payment). If the bank pays for such a check, then it will have to reimburse this amount to the drawer.

In order to reduce the risk of non-payment of the check for the person who accepts the check from the drawer, Western banks began to issue guarantee check cards starting in the mid-60s of the last century.

A guarantee check card is a means of identifying the owner of a bank account who has a check book. Such a card performs a number of functions.

Firstly, the warranty card indicates the limit within which a check can be issued for payment of one purchase.

Secondly, the card guarantees that, within the limit, the check will be paid by the bank, regardless of the availability of money in the drawer's account.

When using a check card, a number of conditions must be met (verification of the signature on the check and the card, the presence of the card number on the checkbook, card expiration date, etc.).

Banks issue such cards only to those customers who have proven their honesty and responsibility in transactions with the bank.

Although a check can be considered as one of the varieties of a bill of exchange, where the bank is the payer, it has a number of differences from a bill of exchange:

A check is issued to the bearer, while a bill of exchange can be either a bearer or an urgent document.

The check is written to the bank, the bill is not.

The check does not need to be accepted by the bank, but the bill must be accepted by the payer.

Checks, as a rule, are not in circulation (although they can be transferred by endorsement), but are directly presented to the bank for payment, while bills of exchange are circulated, passing from one owner to another.

The person who issued the bill is released from liability if the bill is not presented to the payer within a short time (since the delay increases the possibility of abuse); for the check, the bank remains liable (for example, in the UK within 6 years from the date of issue).

A check can be cross-linked, a bill of exchange cannot. When crossing a check, the amount is not paid in cash, but must be credited to the account of the bearer of the check in this bank or transferred to another bank by bank transfer.

If the signature on the check is forged, the bank may refuse to pay for it, but forging the signature of the drawer does not exempt the acceptor from the obligation to pay the bill.

In the field of international tourism, another type of checks is used - traveler's checks.(traveler's check), which are an alternative to cash.

A bank client, going on a tourist or business trip abroad, purchases a check from his (domestic) bank, which is issued in foreign currency. This check is then used to pay for goods abroad or to obtain local currency at the exchange rate at the bank that is the agent of the company or the bank that issued the check.

The world's largest issuer of traveller's checks is American Express, which was founded in 1850, and began issuing the first traveller's checks in 1891. Traveller's checks from other major issuers are also common - VISA, Thomas Cook. These checks, like American Espress checks, can be accepted for payment in major hotels, airlines, travel agencies, restaurants, shops.

The advantage of using traveller's checks over cash is that traveller's checks guarantee the safety of funds when moving. In case of loss, theft or damage of the check, its owner can, within the agreed period, contact the company that is the issuer of travelers' checks and reimburse the cost of the check.

The authenticity of a traveler's check upon presentation is determined by comparing two signatures of its holder. When buying a traveller's check in a bank, the client puts his signature on it.

When buying a product or receiving cash on this check, he must sign again, and both signatures are verified.

Check circulation gives rise to mutual claims of banks to each other. In order to carry out mutual offset of claims of the parties involved in settlements, clearing houses or clearing houses are created. Cashless offset (clearing) of checks can be carried out:

Within one bank

Through local clearing houses

Through the network of correspondent banks

Through the settlement network of the central bank

If the accounts of the drawer and the payer are in the same bank, then the transfer of the amount from account to account by cashless means is carried out by the accounting department of this bank.

When using the local clearing mechanism, banks exchange checks through the clearinghouse and make one final payment based on the balance of settlements per day.

Thus, they cover the difference between the amount of checks presented for payment by customers of this bank and the amount of checks received from other banks and payable by customers of this bank.

The final settlement of settlements between banks is carried out by the central bank or the correspondent bank.

The clearing house carries out a set-off only for checks that are posted on the banks - members of the chamber.

Each bank has a special clearing department where checks are received, which participate in the mutual offset mechanism.

During the working day, checks received at the bank's cash desk or by mail are sorted by member banks.

They are formed in bundles for each individual bank. A list with a list of checks, amounts and a grand total is attached to the packs.

By the end of the day, stacks of checks with special couriers are sent to the clearing house.

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