When being in the bank, you might have seen or heard about an account payee cheque. In this article, you will learn all about this highly reliable and unique form of a cheque; why is it issued? What are the benefits of it? And how you can take advantage of it.
What Is An Account Payee Cheque?
Account payee cheque is a cheque with a specific recipient (Payee) and is bound to them until its end of validity. It is a complete end to end payment method and ensures complete transparency in payment.
Why Is The Account Payee Cheque Issued?
An account payee cheque is issued because it’s highly secure and reduces the probability of misuse. Even the drawer whose name the cheque is issued cannot use it once the payee’s name is written.
How To Write An Account Payee Cheque?
Step 1: Simply take the cheque from the chequebook
Step 2: Draw two lines on the left corner of the said cheque.
Step 3: Write “Account Payee only” between the lines.
Important note: If you do not mention the words “Account Payee,” your cheque will be considered as crossed, not A/C Payee.
Also Read: What is Cheque & Different Types of Cheque
Account Payee Cheque Vs Crossed Cheque?
A Crossed and Account payee cheque is relatively similar to each other and serves fundamentally the same function. They both are made out in the name of a specific party with the intention of security and avoiding misuse.
The critical differentiation between an AC Payee cheque and a crossed cheque is that a crossed one can be endorsed to third parties while an A/C payee cannot. A crossed cheque can be exchanged between many hands as a form of payment before it gets finally deposited in a bank.
Can Account Payee Cheque Be Cashed?
No, an Account Payee cheque cannot be encashed through the counter. It is a crucial feature that keeps your cheque secure and safe from misuse. If you want to encash them, you must first credit them in the payee’s account and then debit the cash.
Can I Deposit Account Payee Cheque In Any Bank?
Yes, you can deposit an account payee cheque in any bank, and it will clear without any issues.
What Is The Validity Of The Account Payee Cheque?
An account payee cheque is valid for upto three months from the date of being issued.
Account Payee Cheques are an essential part of the banking sector, ensuring trust in the entire system. You can use them to avoid your cheques getting compromised and, at the same time, build trust with unknown parties.
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