Types of Bank Cheques

A bearer cheque is payable to whoever holds it, because the payee line says bearer or is left blank, so anyone who presents it can be paid. An order cheque is payable only to the named payee or to a person the payee endorses it to, because the payee signs the back to transfer it to someone else. A bearer cheque is convenient but risky, because a lost bearer cheque can be cashed by a stranger, while an order cheque is safer, because the bank can check the endorsement chain. Most cheques issued today are order cheques, because the named payee and the endorsement rule give the paying bank a clear audit trail of who received the money. A crossed cheque carries two parallel lines across its face, and the crossing tells the paying bank to pay the money only into a bank account, never in cash over the counter. An account payee crossing adds the words account payee between the lines, which means the money must go into the account of the named payee and no one else. The GBP 4,750 cheque in the worked example is crossed and marked account payee, so even if it is stolen, the thief cannot cash it, and the funds can only reach the supplier account. Crossing is the simplest fraud protection on a cheque, and it costs nothing, which is why banks and businesses use it as the default for supplier payments. A certified cheque is a personal cheque that the drawer bank has checked and marked as good, which means the bank confirms that the funds are available and sets them aside for the payment. A bankers cheque, also called a bank draft, is drawn by the bank itself on its own funds, so the payee is paid by the bank rather than by the customer, which makes it safer for large payments such as a property deposit. A traveller cheque is a preprinted cheque bought from a bank or a travel company in fixed amounts, signed twice by the holder, and used as a safe way to carry money abroad. Each of these types exists because the payee wants more certainty than an ordinary personal cheque can give. Choosing the right cheque type is a product and risk decision, and a business analyst should capture the rules in the requirements. A business paying a supplier by post should use a crossed account payee cheque, because it protects the payment if the post is intercepted. A person buying a house should use a bankers cheque, because the seller needs the certainty that the bank itself will pay. A traveller should use a traveller cheque or a prepaid card, because a lost personal cheque abroad is hard to stop. A product owner should consider the cost, because certified and bankers cheques carry a fee, and the clearing time, because a bankers cheque may clear faster than a personal cheque, which changes when the payee can safely release the goods. Worked example with numbers: a business in Leeds pays a supplier GBP 4,750 by crossed account payee cheque, and the crossing means the paying bank must pay the money only into a bank account, never in cash over the counter. The supplier deposits the cheque at its collecting bank on Monday, the collecting bank captures the image and sends it through the clearing system, and the paying bank checks the signature against the mandate and the amount in words against the amount in figures. If both match, the paying bank honours the cheque, and the supplier account is credited by Wednesday at the latest, under the UK Image Clearing System. Failure and recovery: a cheque fails when the signature does not match, when the amount in words differs from the amount in figures, or when the account holds too little. If the signature does not match the mandate, the paying bank returns the cheque unpaid, and the collecting bank reverses the credit it gave the payee, so the supplier loses GBP 4,750 on Wednesday after expecting it on Tuesday. If the account holds too little, the cheque bounces, and the drawer must either fund the account or arrange another payment. The recovery for a signature mismatch is a new cheque with the correct signature, and the recovery for insufficient funds is a funded account and a re-presentment, but both cost days. For a business analyst, product owner or subject matter expert, the cheque type requirement must state the rules for each type, bearer, order, crossed, account payee, certified and bankers cheque, and must state which type to use for which payment. The requirement must also state that a crossed account payee cheque protects the payment if it is lost in the post, because it can only be paid into a bank account, and must state the clearing timeline, a maximum of two working days under the UK Image Clearing System. The test pack must include a bearer cheque, a crossed cheque, and a cheque with a mismatched signature, because each case exercises a different rule. Source: UK Cheque and Credit Clearing Company; last reviewed 7 November 2026.