Bearer Cheque

A bearer cheque can be used to be payable as Cash or bearer with a specific name. The bearer cheque does not have the word ‘bearer’ on the cheque. The cheque is payable over the counter to the bearer or the presenter of the cheque by the drawee bank.

A bearer cheque can be transferred to another person. The transferor of cheque while passing the cheque does not need to endorse the cheque. The bank does not need any identification proof while presenting a bearer cheque for encashment. However, if the cheque amount is substantial the bank may ask for the identification to confirm the same. It is necessary for the encasher to sign at the back of bearer cheque to confirm the receipt of money from the bank.

The order cheque is the one wherein the word bearer is canceled on the cheque. As the word bearer gets canceled the cheque automatically becomes an order cheque.

An order cheque is paid to the payee across the bank’s account. The identification of the payee is insisted on by the bank while presenting an order cheque. The bank will also ask for the ID and signature of the payee on the back of the cheque. The order cheque can be endorsed to another person and negotiated by the transferor. It only requires the signature of the transferor to initiate the transfer or negotiate the cheque to another person.

The bank collects the order cheque deposited by any person other than payee. It is not necessary for the payee to personally deposit the cheque for collection. An order cheque is considered as the bearer cheque if the word ‘bearer’ is not canceled while issuing the cheque. When a cheque is issued to pay Cash it is called the cash cheque. However, a cash cheque is not preferable as there is a risk of fraud. The third party cheques are sometimes chargeable by many banks.