All About Account Payee Cheque: Definition, Purpose, Write an Encash - Branex (2024)

If a representative payee takes advantage of their position, the Social Security Administration should be notified immediately. You may need to provide additional details, like your address or account number, so that the utility company can apply the payment to your account. This also means even a small mistake on your cheque will result in your cheque not getting cleared. And, most banks have started to charge for extra cheques you order.

1. The endorsee’s name can be written on the cheque, and their signature can be seen on the back of the cheque leaf.
2. A holder cheque is perhaps the most prone to fraud, but an APC is a very safe document.
3. The bank will then verify your details and after the clearance, the cash will be handed to you.

If a representative payee is doing something that works against an ultimate beneficiary, the Social Security Administration should be immediately notified. A representative payee has rights and powers similar to that of a conventional payee, but a representative payee must manage moneyfor the benefit ofthe actual beneficiary. Funds must be spent on (or saved for) only in ways that help the beneficiary. In this aspect, the representative is acting as the fiduciary to the actual payee. Cheque endorsem*nt helps people receive money even if they are not able to visit the bank. The party issuing a check is called the payor (in legal parlance) or the payer (in common communication).

What is an account payee cheque?

Second, it ensures that the funds are paid to the intended recipient. Third, it can be used to make payments to people who do not have a bank account. If you are issuing an account payee cheque, you must draw two parallel lines on the top left corner of the cheque leaf and add the words “Account Payee Only” or “https://1investing.in/ Only” between the lines. You must write the intended payee’s name, the payment amount (in words and figures), the date of issue, and sign the cheque. In the case of account payee cheques, the phrase “account payee” or “A/C payee” is typically written between the two parallel lines that mark the crossing. This indicates that the funds should only be credited to the bank account of the payee, making the cheque non-negotiable.

That person can negotiate the check, but they must manage money for the benefit of the actual beneficiary. As a result, the funds must be spent on (or saved for) things that help the beneficiary. It’s illegal for a representative payee to enrich themselves with these funds. After endorsing a check, the payee presents it to a bank or credit union for deposit.

Procedure of Account Payee Cheque Clearance

The deducted amount is paid out to the recipient’s account upon encashment. 1) Drawer-He is a person who holds the account and has written and signing authority on cheque. He is directing banks to pay a certain amount of money to thecertain person or to the bearer of the cheque. Therefore, in simple words, you may say that a person who holds thebank account and who sign on cheque is called the drawer. All cheques are bearer cheques unless the word bearer is crossed or another form of crossing is made on the cheque.

You will have to provide the cheque, your ID proof and fill the required details in the encashment slip. The bank will then verify your details and after the clearance, the cash will be handed to you. There are several situations in which an account payee cheque may be used. For example, a business may use an account payee cheque to pay an invoice or a bill. An individual may use an account payee cheque to pay rent or a mortgage.

However, you may only do so with the money in your accounts. The definition of an account payee cheque is discussed above. Below are the definitions for other different kinds of cheques. In case of a crossed cheque, the payee is free to make further endorsem*nts. This crossed cheque is no more a bearer cheque where anyone can negotiate and get payment across the counter.

An account payee-only cheque is a type of cheque that can only be deposited into the account of the payee named on the cheque. The cheque cannot be cashed or deposited into another person’s account. The “account payee only” instruction is essential to prevent fraud and ensure the funds are paid to the intended recipient. An account payee cheque is a cheque drawn in favour of a payee’s bank account. When you issue such a cheque, the issuer must deposit it with their bank. The bank then clears the cheque within a few days and the funds are transferred from your account into that of the payee named on the cheque.

Designed to safeguard against fraud and unauthorised use, these cheques can only be deposited into the specified payee’s account, providing peace of mind for both parties involved. The payee is a person or entity to whom the cheque is addressed. For example, if you write an account payee cheque to your landlord for rent, your landlord is the payee. When you open a Bank Account, your bank provides you a cheque book, which you can use to issue cheques to different payees.

What Is an Account Payee Cheque?

A cheque is written to instruct the bank to pay the specified sum to the payee named on it. It can be written by both current account and savings account holders and is very helpful in carrying out transactions in a much more efficient and easy way. A cheque ensures that the amount will be paid to the bearer. The date, amount, the account holder’s signature and the payee’s name must all be included on a cheque for the bank to begin processing the payment. The bank won’t accept your cheque if any of the information is written incorrectly.

The cheque book allows you to pay different people, entities, service providers, etc., what you owe them. While most of us have adapted to the digital age, where we conduct online transactions, account payee cheques still remain relevant and are used widely. Let us learn more about these vital banking instruments, its features and what it entails. This a/c payee type of cheque is different from a regular, or “open,” cheque, which can be cashed by anyone who holds it. The amount written on the cheque will be paid only to the person whose name is written on it. The biggest advantage of this is that in case of loss of cheque, a fraudster cannot take the cash in return by pretending to be the target person.

Order Cheque

If you do so, then one can’t endorse the same cheque to others. So in the aboveexample,the cheque must be encashed by depositing to payee account (In the above example it is in my name). This makessecurepayment to payee only, but any other third parties. To encash an account payee cheque, you need to visit the bank where the cheque has been issued, and where the account of the issuer is maintained.

Typically, the banks are the drawee and are given instructions by the drawers to withdraw the funds. The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned.