Payments Academy
Cheque four-corner model PAYMENT OPERATIONS STARTED LIVE 01 Cheque four-corner model - has four parties ACTIVE 02 Paying bank verification and payment - checks the drawer account QUEUED 03 Collecting bank - records the deposit QUEUED 04 Paying bank - signature against the mandate QUEUED 05 Cheque and the money - directions, and that is the heart QUEUED 06 Business analyst - must design for the delay between QUEUED The four-corner model for a cheque has four parties Step 1 of 6 Cheque four-corner model STARTED Cheque four-corner model has four parties ACTIVE Paying bank verification and payment checks the drawer account QUEUED Collecting bank records the deposit QUEUED Paying bank signature against the mandate QUEUED Cheque and the money directions, and that is the heart QUEUED Business analyst must design for the delay between QUEUED The four-corner model for a cheque has four parties
Paying bank verification and payment PAYMENT OPERATIONS IN PROGRESS LIVE 01 Cheque four-corner model - has four parties DONE 02 Paying bank verification and payment - checks the drawer account ACTIVE 03 Collecting bank - records the deposit QUEUED 04 Paying bank - signature against the mandate QUEUED 05 Cheque and the money - directions, and that is the heart QUEUED 06 Business analyst - must design for the delay between QUEUED The paying bank checks the drawer account, the signature and the funds, and then debits the drawer and pays the collecting bank, which credits the supplier. Step 2 of 6 Paying bank verification and payment IN PROGRESS Cheque four-corner model has four parties DONE Paying bank verification and payment checks the drawer account ACTIVE Collecting bank records the deposit QUEUED Paying bank signature against the mandate QUEUED Cheque and the money directions, and that is the heart QUEUED Business analyst must design for the delay between QUEUED The paying bank checks the drawer account, the signature and the funds, and then debits the drawer and pays the collecting bank, which credits the supplier.
Collecting bank PAYMENT OPERATIONS IN PROGRESS LIVE 01 Cheque four-corner model - has four parties DONE 02 Paying bank verification and payment - checks the drawer account DONE 03 Collecting bank - records the deposit ACTIVE 04 Paying bank - signature against the mandate QUEUED 05 Cheque and the money - directions, and that is the heart QUEUED 06 Business analyst - must design for the delay between QUEUED The collecting bank records the deposit, gives the payee a receipt, Step 3 of 6 Collecting bank IN PROGRESS Cheque four-corner model has four parties DONE Paying bank verification and payment checks the drawer account DONE Collecting bank records the deposit ACTIVE Paying bank signature against the mandate QUEUED Cheque and the money directions, and that is the heart QUEUED Business analyst must design for the delay between QUEUED The collecting bank records the deposit, gives the payee a receipt,
Paying bank checks mandate and funds PAYMENT OPERATIONS IN PROGRESS LIVE 01 Cheque four-corner model - has four parties DONE 02 Paying bank verification and payment - checks the drawer account DONE 03 Collecting bank - records the deposit DONE 04 Paying bank - signature against the mandate ACTIVE 05 Cheque and the money - directions, and that is the heart QUEUED 06 Business analyst - must design for the delay between QUEUED The paying bank checks the signature against the mandate, confirms the account is open, checks that the funds cover GBP 4,750, and looks for a stop instruction or a fraud flag. Step 4 of 6 Paying bank checks mandate and funds IN PROGRESS Cheque four-corner model has four parties DONE Paying bank verification and payment checks the drawer account DONE Collecting bank records the deposit DONE Paying bank signature against the mandate ACTIVE Cheque and the money directions, and that is the heart QUEUED Business analyst must design for the delay between QUEUED The paying bank checks the signature against the mandate, confirms the account is open, checks that the funds cover GBP 4,750, and looks for a stop instruction or a fraud flag.
Cheque and the money travel in opposite PAYMENT OPERATIONS IN PROGRESS LIVE 01 Cheque four-corner model - has four parties DONE 02 Paying bank verification and payment - checks the drawer account DONE 03 Collecting bank - records the deposit DONE 04 Paying bank - signature against the mandate DONE 05 Cheque and the money - directions, and that is the heart ACTIVE 06 Business analyst - must design for the delay between QUEUED The cheque and the money travel in opposite directions, and that is the heart of the pull model. Step 5 of 6 Cheque and the money travel in opposite IN PROGRESS Cheque four-corner model has four parties DONE Paying bank verification and payment checks the drawer account DONE Collecting bank records the deposit DONE Paying bank signature against the mandate DONE Cheque and the money directions, and that is the heart ACTIVE Business analyst must design for the delay between QUEUED The cheque and the money travel in opposite directions, and that is the heart of the pull model.
Business analyst PAYMENT OPERATIONS COMPLETE LIVE 01 Cheque four-corner model - has four parties DONE 02 Paying bank verification and payment - checks the drawer account DONE 03 Collecting bank - records the deposit DONE 04 Paying bank - signature against the mandate DONE 05 Cheque and the money - directions, and that is the heart DONE 06 Business analyst - must design for the delay between ACTIVE A business analyst must design for the delay between presentment and credit Step 6 of 6 Business analyst COMPLETE Cheque four-corner model has four parties DONE Paying bank verification and payment checks the drawer account DONE Collecting bank records the deposit DONE Paying bank signature against the mandate DONE Cheque and the money directions, and that is the heart DONE Business analyst must design for the delay between ACTIVE A business analyst must design for the delay between presentment and credit

Key points of this lesson, in order.

0:00 / 2:50 Step 1 of 6

The Four-Corner Model for a Cheque Payment

Cheques and Paper Instruments, Lesson 3 of 7, Narration 2:50, D01 Foundations of money and payments

PresentmentSettlementClearing

What you will learn

Your objective. By the end of this lesson, you will be able to explain four-corner model for a cheque payment. The four-corner model for a cheque has four parties, the drawer, who writes the cheque, the payee, who receives it, the collecting bank, which is the payee bank, and the paying bank, which is the drawer bank.

Why it matters. A business analyst must design for the delay between presentment and credit, because the payee sees the cheque as deposited on day one but cannot safely spend the money until the clearing completes, and a product owner must decide what the app shows during that window.

Chapter objective: Paper instructions, clearing and the pull model

Key learning points

  • Cheque four-corner model
  • Paying bank verification and payment
  • Collecting bank
  • Paying bank checks mandate and funds
  • Cheque and the money travel in opposite
  • Business analyst

Key terms

Presentment: The submission of a card transaction by the acquirer to the scheme for clearing after authorisation and capture.

Settlement: The final movement of funds between banks to discharge obligations created by cleared payments. Settlement is usually made in central bank money or through correspondent accounts.

Clearing: The process of exchanging payment instructions between banks and calculating what each bank owes the others.

Payment flow diagram showing The Four-Corner Model for a Cheque Payment.

Practise this lesson

Exercise

Work out what the beneficiary receives for a GBP 4,750 payment under OUR, SHA and BEN.

Use the charge arrangement rules in this lesson and the correspondent and beneficiary bank fees named in the lesson.

  1. What to do. Calculate the amount credited under each of the three arrangements and state who pays each fee.

Correct result. Under OUR the sender pays all charges and the beneficiary receives the full amount. Under SHA the sender pays the sending charges and the beneficiary pays the receiving charges. Under BEN the beneficiary pays all charges and receives the amount less all fees.

Why. The charge arrangement decides who pays and how much arrives. A customer who was promised the full amount and receives less will complain, and the complaint lands on the analyst.

Check your understanding

Practice question

Which of the following best describes four-corner model for a cheque payment?

Takeaway and next step

What to remember

A business analyst must design for the delay between presentment and credit, because the payee sees the cheque as deposited on day one but cannot safely spend the money until the clearing completes, and a product owner must decide what the app shows during that window.

Follow GBP 4,750 through every stage, from instruction to beneficiary credit, and note where it can stop.

Open the Payment Lifecycle Simulator →

Builds on "Types of Bank Cheques".

Transcript and full text

Show transcript

The four-corner model for a cheque has four parties, the drawer, who writes the cheque, the payee, who receives it, the collecting bank, which is the payee bank, and the paying bank, which is the drawer bank. The drawer in Leeds writes a cheque for GBP 4,750 to the supplier in Bristol and posts it, and the supplier receives it and pays it into an account at the collecting bank. The collecting bank checks the cheque, records the payee account and the amount, and sends the cheque details to the paying bank for clearing. The paying bank checks the drawer account, the signature and the funds, and then debits the drawer and pays the collecting bank, which credits the supplier. The first step is the issue of the cheque, when the drawer writes the date, the payee name, the amount in words and figures, and the signature, and then hands the cheque to the payee. The second step is the presentment, when the payee deposits the cheque at the collecting bank, either at a branch, through an ATM or by taking a photograph in a mobile banking app. The collecting bank records the deposit, gives the payee a receipt, and captures an image of the front and back of the cheque, including the magnetic ink characters that identify the paying bank, the account number and the cheque number. The image and the data are then sent into the clearing system. The third step is the clearing exchange, when the collecting bank sends the cheque image and data to the paying bank through the clearing system, and the paying bank decides whether to honour the cheque. The paying bank checks the signature against the mandate, confirms the account is open, checks that the funds cover GBP 4,750, and looks for a stop instruction or a fraud flag. If the checks pass, the paying bank marks the cheque as paid and the clearing system calculates the net amount the paying bank owes the collecting bank. The fourth step is settlement, when the paying bank pays the net amount through the settlement system, and the collecting bank credits the supplier account with GBP 4,750. The cheque and the money travel in opposite directions, and that is the heart of the pull model. The paper cheque travels from drawer to payee to collecting bank to paying bank, while the money travels from the paying bank to the collecting bank to the payee account. The ledger entries follow the money. The drawer account is debited GBP 4,750, the paying bank settlement account is debited, the collecting bank settlement account is credited, and the supplier account is credited GBP 4,750. A business analyst must design for the delay between presentment and credit, because the payee sees the cheque as deposited on day one but cannot safely spend the money until the clearing completes, and a product owner must decide what the app shows during that window. Worked example with numbers: the drawer in Leeds writes a cheque for GBP 4,750 to a supplier in Bristol, and the four corners are the drawer, the payee, the collecting bank and the paying bank. The drawer hands the cheque to the payee on Monday, the payee deposits it at the collecting bank the same day, the collecting bank sends the cheque image and data to the paying bank through the clearing system, and the paying bank checks the signature and the amount, then honours the cheque. The money travels from the paying bank to the collecting bank to the payee account, while the paper cheque travels in the opposite direction, from drawer to payee to collecting bank to paying bank, and that opposite flow is the heart of the pull model. Failure and recovery: the four-corner cheque fails when the paying bank refuses to honour it, and the failure is a return that reverses the credit. If the paying bank finds that the signature does not match the mandate, it returns the cheque unpaid, and the collecting bank reverses the GBP 4,750 credit it gave the supplier, so the supplier account falls by GBP 4,750 on Wednesday. If the drawer account holds too little, the cheque bounces, and the supplier must ask the drawer for another payment. The recovery is a new cheque with the correct signature and enough funds, but the supplier has lost two days, and the business relationship may suffer, which is why a supplier should check the drawer creditworthiness before accepting a cheque for a large amount. For a business analyst, product owner or subject matter expert, the four-corner requirement must name all four parties and the direction of each flow, the paper from drawer to payee to collecting bank to paying bank, and the money from paying bank to collecting bank to payee account. The requirement must also state the clearing steps, presentment, clearing exchange and honour or return, and must state that a cheque is a pull payment, which changes the risk, the timing and the exception handling. The test pack must include a cheque that is honoured, a cheque that is returned for a bad signature, and a cheque that bounces for insufficient funds. Source: UK Cheque and Credit Clearing Company; last reviewed 7 November 2026.

The four-corner model for a cheque has four parties, the drawer, who writes the cheque, the payee, who receives it, the collecting bank, which is the payee bank, and the paying bank, which is the drawer bank. The drawer in Leeds writes a cheque for GBP 4,750 to the supplier in Bristol and posts it, and the supplier receives it and pays it into an account at the collecting bank. The collecting bank checks the cheque, records the payee account and the amount, and sends the cheque details to the paying bank for clearing. The paying bank checks the drawer account, the signature and the funds, and then debits the drawer and pays the collecting bank, which credits the supplier.

The first step is the issue of the cheque, when the drawer writes the date, the payee name, the amount in words and figures, and the signature, and then hands the cheque to the payee. The second step is the presentment, when the payee deposits the cheque at the collecting bank, either at a branch, through an ATM or by taking a photograph in a mobile banking app. The collecting bank records the deposit, gives the payee a receipt, and captures an image of the front and back of the cheque, including the magnetic ink characters that identify the paying bank, the account number and the cheque number. The image and the data are then sent into the clearing system.

The third step is the clearing exchange, when the collecting bank sends the cheque image and data to the paying bank through the clearing system, and the paying bank decides whether to honour the cheque. The paying bank checks the signature against the mandate, confirms the account is open, checks that the funds cover GBP 4,750, and looks for a stop instruction or a fraud flag. If the checks pass, the paying bank marks the cheque as paid and the clearing system calculates the net amount the paying bank owes the collecting bank. The fourth step is settlement, when the paying bank pays the net amount through the settlement system, and the collecting bank credits the supplier account with GBP 4,750.

The cheque and the money travel in opposite directions, and that is the heart of the pull model. The paper cheque travels from drawer to payee to collecting bank to paying bank, while the money travels from the paying bank to the collecting bank to the payee account. The ledger entries follow the money. The drawer account is debited GBP 4,750, the paying bank settlement account is debited, the collecting bank settlement account is credited, and the supplier account is credited GBP 4,750. A business analyst must design for the delay between presentment and credit, because the payee sees the cheque as deposited on day one but cannot safely spend the money until the clearing completes, and a product owner must decide what the app shows during that window.

Worked example with numbers: the drawer in Leeds writes a cheque for GBP 4,750 to a supplier in Bristol, and the four corners are the drawer, the payee, the collecting bank and the paying bank. The drawer hands the cheque to the payee on Monday, the payee deposits it at the collecting bank the same day, the collecting bank sends the cheque image and data to the paying bank through the clearing system, and the paying bank checks the signature and the amount, then honours the cheque. The money travels from the paying bank to the collecting bank to the payee account, while the paper cheque travels in the opposite direction, from drawer to payee to collecting bank to paying bank, and that opposite flow is the heart of the pull model.

Failure and recovery: the four-corner cheque fails when the paying bank refuses to honour it, and the failure is a return that reverses the credit. If the paying bank finds that the signature does not match the mandate, it returns the cheque unpaid, and the collecting bank reverses the GBP 4,750 credit it gave the supplier, so the supplier account falls by GBP 4,750 on Wednesday. If the drawer account holds too little, the cheque bounces, and the supplier must ask the drawer for another payment. The recovery is a new cheque with the correct signature and enough funds, but the supplier has lost two days, and the business relationship may suffer, which is why a supplier should check the drawer creditworthiness before accepting a cheque for a large amount.

For a business analyst, product owner or subject matter expert, the four-corner requirement must name all four parties and the direction of each flow, the paper from drawer to payee to collecting bank to paying bank, and the money from paying bank to collecting bank to payee account. The requirement must also state the clearing steps, presentment, clearing exchange and honour or return, and must state that a cheque is a pull payment, which changes the risk, the timing and the exception handling. The test pack must include a cheque that is honoured, a cheque that is returned for a bad signature, and a cheque that bounces for insufficient funds. Source: UK Cheque and Credit Clearing Company; last reviewed 7 November 2026.

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