By Hrishikesh Menon. Edited by Arjun Chandrasekar.
Overview
A cheque, or check, is a financial instrument given by the bank to an account holder with which the said account holder may pay another person by issuing a cheque for the required amount to the other person. This article will cover a brief history of the usage of cheques, how to write a cheque, and how to cash one.
Brief History
The use of checks begins in the 9th century when Muslim traders created a document called the ‘sakk’ to issue to another trader so that the trader could go withdraw the money issued in the sakk in another city or even country. By the 15th century, the European world was introduced to checks as well but they were hand-written which led to massive check fraud which led to the prohibition of checks until the 17th century when the first printed check was created in England. These checks had a specific serial number which allowed bankers to verify the checks. This, included with the centralization of security-backed banknotes, payments through checks increased exponentially. By 2003, there were almost around 37 billion transactions done through checks, which was higher than any other method of payment.
Parts of a Check + How to Write One
There are many spaces on a check. At the top left the check writer will write their name, address, city, state, and zip code. On the top right, there will be a space for the date where the writer will write the date when the check is being issued. In the middle, there will be 3 spaces. First, there is a space after the words “Pay to the order of”. This is where the check writer will write which individual or organization the check is being issued to. Right next to the “Pay to the order of” space, there is a box with a dollar sign to its left. This is where the amount being issued is written. Below these 2 spaces is a long space with the word “dollars” at the end. This is where the amount being issued must be written in words. For example: if Charlie is writing a check for $100, he would have to write One Hundred in the space. Finally, at the bottom, there are 2 spaces. One says “Memo” and has a space following it, and the other is just a blank space. The “Memo” space is where the reason for the check goes. This space is optional but recommended. The other blank space is where the check issuer’s signature goes.
How to Cash a Check
The simplest way to cash a check is to take the check to the corresponding bank and ask a teller to cash it. If a person does not have a bank account at the corresponding bank, there are a few ways they can cash the check. They can cash the check: at a retailer that allows cashing checks (ie. department stores, grocery stores, gas stations, etc), at a check-cashing store, or deposit the check into an atm and redirect the cash into a debit card account after which they can use their atm/debit card to withdraw the cash. Another obstacle some people may have is the presence of an ID. Banks usually require an ID to cash checks so here are some ways people can cash a check without an ID. People can deposit the check into an ATM and redirect the cash into an account (like stated above). They can also use the retail check cashing method. Last but not least, the check receiver could sign it over to someone else who is able to cash the check and they can give that cash over to the initial receiver.
Conclusion
Checks were introduced in the 9th century when Muslim traders created Sakks (a type of check). Slowly the concept of check transactions progressed and spread to Europe where they were handwritten but banned short after. By the 17th century, checks were starting to be printed and now checks are used for transactions almost all the time. When writing a check, you write your name and residence, date, person, or organization for which the check is, amount being issued (in number and words), memo or purpose (optional), and signature. When cashing a check, you can cash it at the corresponding bank, at a retailer, at a check-cashing store, sign it over to someone else, deposit into an ATM account, and many more.
