Cheques.docx - 1.0 INTRODUCTION The origin of cheques as a method of payment is subject to debate but they have been in common use for over 1000 years

Cheques.docx - 1.0 INTRODUCTION The origin of cheques as a...

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1.0 INTRODUCTION The origin of cheques as a method of payment is subject to debate but they have been in common use for over 1000 years. With the development and advancement in banking sector, individuals and corporates have easy access to the use of products and services provided by the financial institutions compared to brick-and-mortar era. Generally, cheques are the traditional payment method which are often used by people to make a payment transaction. There are certain reasons why cheques are used widely across the globe. It is because it is a safe way to make a payment. It is considered as a trusted form of making payments as only the payee’s name or recipient name is able to cash the cheques at the bank with their identity being proved. Besides, it involves batch process as it allows the customers who are the drawers to make post-dated cheques that grant them a specific period of time to deposit the funds into their current account. That means the consumers can use the cheques to make payments for goods and services in advance even if they do not have the funds in their accounts. 1.1 CHEQUE Basically, cheque refers to a bill of exchange drawn on a bank by the holder of a current account which is payable into a bank account according to the crossing made by the drawer. Cheque is a negotiable instrument which is used to make payments for day-to-day business transaction. It is normally used by individuals, businesses, corporate and so forth to transact for making and receiving payment in order to minimize the risk and possibility of loss. This is the reason why some people claim that payment by using cheque is the safest way to conduct a business transaction as it helps to maintain record in account statement to whom the payment is made and by whom the payment is received, being easy and fast to track the historical transactions through bank account statement. Based on Bill of Exchange Act 1949, section 73(1) defined cheque as a bill of exchange drawn on a banker payable on demand. 73 (2) mentioned except as otherwise provided in this Part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque.
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