Chequebook: Why It Still Matters in a Digital World

Posted on Wednesday, March 6th, 2024 | By IndusInd Bank

Cheques are common payment instruments that make transactions simple for customers. Despite the rise of digital banking, cheques are still a crucial part of the banking industry. They are used for a variety of transactions, from small to large amounts. In this blog, we will look at why cheques still matter in the banking industry and what makes them different from other payment methods.

What are Chequebooks?

A cheque is a written request for payment from one account to another from a financial institution, usually a bank.

To understand how a cheque works, let us suppose you are writing a cheque for your friend. In that case, you will be the drawer and your friend will be the payee.

You instruct your bank to transfer a specific sum to your friend’s bank account.

To start the transfer process, the payee has to deposit the cheque at their bank. After the deposit, the bank takes the stated amount from the drawer’s account and transfers it to the payee’s account. The issuer of the cheque must have a bank-affiliated current account or savings account. There are different types of chequebooks, depending on your account type. 

Bank cheques are regarded as a convenient and secure method of conducting business between two parties. Contrary to cash, which can be misplaced or stolen, cheques are connected to the user’s bank account and are simple to track down and validate. They are, therefore, a preferred option for transactions.

Here are a few things to remember when dealing with cheques:

• Cheques can be issued for a savings account or current account.
• A cheque can only be cashed by the payee whose name is written on the cheque.
• A cheque without a date is considered void.
• A bank cheque remains valid for three months from the date of issue.
• A 9-digit MICR code located at the bottom of each cheque facilitates the clearance procedure.
• The cheque’s amount must be indicated in both words and numbers.
• The drawer must not overwrite anything on the cheque, especially their signature.
• The payee’s name must be written correctly.

How are Chequebooks Relevant in the Digital World?

When you write a cheque, you are documenting that you made a purchase. The cheque serves as a receipt, useful when paying for services, repaying loans, or settling any matter that could be disputed in court. If you ever need to provide proof of payment, your bank will always have a copy of your cheque available.

Since writing a cheque is as good as paying cash, businesses might accept cheques over cards and forego the processing fees. While cards have a processing fee, cheques do not require you to pay any processing fee. So, in addition to not paying a fee for paying for the swipe machine at the stores, you do not have to pack your shopping cart with unnecessary items to reach the minimum spend requirement.

With IndusInd Bank, certain additional features come into play, further securing the process of using chequebooks. By signing up for IndusInd Bank’s Positive Pay Service, you can now protect all of your cheque payments against any unauthorised usage. You can use Positive Pay to notify the Bank in advance of any cheques you intend to present for clearing. IndusInd Bank will compare the details given by the drawer to the actual cheque presented for clearance. Your cheque will be cleared if this information is accurate. If the details don’t match, the cheque will not be approved and your account will not be charged.

How are Cheques a Secure Option?

The cheque has security components like holograms, watermarks, and unique inks that make it challenging to copy or change. Cheques are also widely in use because they give you the option to stop the payment.

It’s essential to keep track of the details of the cheques you’ve issued, such as the payee and the amount, to ensure your financial transactions are accurately recorded and to avoid potential issues.

• When writing cheques, be sure to record all relevant information, such as the cheque number, payee, amount, and date.
• For each cheque you write, note this information in a cheque register book.
• Include a brief description of the payee along with the cheque number, date, and amount in the register book.
• This will make it easier for you to manage your cheques and make sure that the records of your financial dealings are accurate.

The following are some of the key features and benefits of chequebooks:

• It features built-in safeguards, such as the necessity of a bank’s approval and the requirement that both parties sign the cheque.
• Both the payment and the payee are left with a paper trail, which makes it simpler to follow and settle any potential disagreements.
• Cheques are only accessible to and usable by bank account holders.
• Cheques require the account holder’s signature, the payee’s name, the date, and the amount in words and numbers.

Conclusion

Cheques are widely used for business transactions and are considered a foundational element of the banking sector. Merchants and businesses continue to use chequebooks due to their convenience, given the need for a secure payment method for high-value transactions. Businesses are more prone to theft if they are carrying a large amount of cash. However, carrying a chequebook is hassle-free. Therefore, cheques continue to be a widely used and safe method of sending and receiving payments despite the extensive use of digital technology.

If you are looking to open a current account, apply now for the Indus Tarakki Current Account. You can enjoy the features of a free chequebook, free email statements, free NEFT/RTGS/IMPS, and much more!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author 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.