In addition to the standard cheque, several variations have been developed to address specific needs or to solve common issues associated with regular cheques. These variations cater to different purposes and provide more security or reliability in transactions.
- Cashier’s Cheques and Bank Drafts:
Cashier’s cheques (used in the US) and bank drafts (used in the UK and Commonwealth countries) are cheques issued by a financial institution against its own funds, rather than an individual’s account. These cheques are guaranteed by the bank at the time of issuance, meaning they are considered almost as good as cash. However, they are still vulnerable to theft or loss, and in such cases, the bank can stop payment, meaning the guarantee is not absolute. - Certified Cheques:
A certified cheque is a cheque that is drawn against the drawer’s account but is certified by the bank to confirm that sufficient funds are available to honor the cheque. The bank sets aside the necessary amount in a special account until the cheque is cashed or returned. This ensures the cheque will not “bounce,” offering security similar to that of cash. - Payroll Cheques:
Payroll cheques are issued to employees as payment for wages or salaries. While the use of cheques for salary payments has become less common, the term “pay cheque” remains in everyday language. Government entities and the military often use these types of cheques to pay employees or contractors. - Warrants:
Warrants are similar to cheques but differ in that they are not drawn against a deposit account with cleared funds. Typically issued by government bodies, warrants are instructions to pay the warrant holder, either immediately or after a specified date, and are not necessarily negotiable. - Traveller’s Cheques:
Traveller’s cheques were used primarily for travel purposes and could be replaced if lost or stolen. They provided a safe alternative to carrying large amounts of cash. However, with the rise of credit and debit cards, their use has declined, and many businesses no longer accept them. - Money Orders and Postal Orders:
Money orders or postal orders are similar to cheques but are pre-paid and issued by institutions like post offices or banks. They are guaranteed by the issuing institution and can be used to make payments to third parties. Money orders were once a common method for sending small payments securely by post. - Oversized Cheques:
Oversized cheques, often used for public events or charity donations, are typically much larger than standard cheques. These novelty cheques, which can be as large as 12 by 25 meters, are primarily for presentation purposes and are rarely used for actual transactions. A normal cheque is usually provided for actual payment, with the oversized cheque kept as a souvenir. - Payment Vouchers:
In some public assistance programs, such as food assistance, payment vouchers are issued to beneficiaries. These vouchers function like cheques and can be deposited in the same way, but they are typically restricted to certain purchases, like groceries, as outlined by the program.
These variations cater to different contexts, offering more security or ease of use than regular cheques, depending on the needs of the user.