Bearer Cheque (b) Order Cheque (c) Crossed Cheque
POINTS WHICH MAKE THE DIFFERENCE
- Definition:
- It is a cheque, which involves no restriction and any person can withdraw money from the bank without giving his identification.
- It is a cheque on which the word ‘Order’ is written after the name of payee and the bank demands identification from presenter for the payment of cheque.
- If two transverse parallel lines are drawn on the face of cheque, it is called crossed cheque.
- Mode of Payment:
- The amount of this cheque is paid at the counter of bank without any identification.
- The amount of this cheque is not paid without identification.
- This cheque is not paid in terms of money. Firstly, the amount of this cheque is transferred to the A/c of payee and for the withdrawal of money the payee has to draw a new cheque.
- Difference in Words:
- In this cheque, after the name of payee, the word “Bearer” is written.
- In this cheque, the word “Order” is written after the name of payee.
- This cheque is marked by two transverse parallel lines. Sometimes, some words (e.g.) “X & Co.” or “A/c payee only” between the lines are written and sometimes these lines are kept blank.
- Safety Point:
- This cheque is not considered as a safe cheque.
- This cheque is safer as compared to bearer cheque.
- This cheque is considered much safer as compared to Bearer
or Order cheque.
- Alteration:
- This cheque can be converted into order cheque with the consent of holder.
- This cheque can be converted into bearer cheque. In this regard, the drawer of cheque is the sole authority.
- The crossing of crossed cheque can be cancelled and only the drawer of this cheque has the authority to do so.
- Endorsement:
- The right to receive the amount of this cheque can be transferred without any endorsement.
- The right to receive the amount of this cheque cannot be transferred without endorsement.
- This cheque also requires endorsement for the transfer of rights.
- Parallel Lines:
- Two transverse parallel lines are not drawn on the face of cheque.
- Two transverse parallel lines are also not drawn on the face of cheque.
- Two transverse parallel lines are drawn on the face of cheque.
- ) Payee:
- The presenter or holder of this cheque can withdraw the amount.
- Only that person can withdraw the amount whose name is written on the cheque.
- The amount of crossed cheque can be received by a nominated .person only through his bank account.
In the world of finance and banking, there are various types of cheques that serve different purposes. Two such types are the bearer crossed cheque and the order cheque. While both these cheques are used for making payments, they possess distinct features and offer different levels of security. In this article, we will delve into the details of bearer crossed and order cheques, comparing them in terms of usage, security, and functionality.
Bearer Crossed Cheque
A bearer crossed cheque is a type of cheque that can be encashed over the counter by anyone who holds it, regardless of whether their name is mentioned on the cheque or not. This cheque is marked with two parallel lines at the top left corner, signifying that it is intended to be paid only through a bank. Bearer crossed cheques are generally used for small transactions or when immediate cash is needed.
Usage
Bearer crossed cheques are often utilized for personal payments, petty expenses, or when an individual wants to withdraw cash from their own account. These cheques are ideal in situations where the payee’s name is not required, as they can be easily used by anyone who possesses them.
Security
Although bearer crossed cheques are convenient in terms of ease of use, they carry a higher risk of fraud and theft compared to other types of cheques. Since bearer cheques do not require the endorsement of the payee, they can be easily misused if lost or stolen. It is essential to handle bearer crossed cheques with caution and ensure their safekeeping to prevent unauthorized encashment.
Order Cheque
On the other hand, an order cheque is a type of cheque that can only be encashed by the payee whose name is mentioned on the cheque. The name of the payee is typically prefixed by the words “Pay” or “Pay to the order of” on the face of the cheque. Order cheques are considered to be more secure and are widely used for business transactions.
Usage
Order cheques are predominantly used in commercial transactions, where there is a requirement to make payments to specific individuals or entities. These cheques provide a higher level of accountability and ensure that the payment is received by the intended recipient only.
Security
Order cheques offer better security compared to bearer crossed cheques, as they require the endorsement and identification of the payee before the funds can be disbursed. This reduces the risk of unauthorized access to the funds and provides a trail of accountability.
