Cheque
A written order to pay money from an account.
A cheque (or check in American English) is a negotiable instrument that orders a financial institution to pay a specific amount of money from a specified transactional account held in the drawer's name to the payee. The drawer, who writes the cheque, must have a transaction banking account—often called a current, cheque, chequing, or checking account—where the funds are held. The cheque includes details such as the monetary amount, date, and payee, and is signed by the drawer, instructing their bank (the drawee) to make the payment. Cheques are order instruments, not bearer instruments, meaning they are generally payable only to the named payee, though in some countries like the US, the payee may endorse the cheque to a third party. They are a type of bill of exchange developed to avoid carrying large sums of money.
The history of cheques stretches back to ancient times. In India’s Maurya Empire (321–185 BC), a commercial instrument called the *adesha* ordered a banker to pay a third person. Ancient Romans used a form called *praescriptiones* in the 1st century BC. From the 3rd century AD, Persian banks issued letters of credit known as *čak*, which evolved into the *sakk* used by traders in the Abbasid Caliphate. By the 9th century, a merchant could cash a *sakk* drawn on a bank in another country. In the 13th century, Venice developed the bill of exchange for international trade. In the early 1500s, Dutch cashiers began paying money to anyone bearing a written order from a depositor. By the 17th century, bills of exchange were used for domestic payments in England, and cheques evolved from these, initially called drawn notes.
Cheques became a highly popular non-cash payment method during the 20th century, with usage peaking in the early 1990s when billions were issued annually due to automated processing. Since then, usage has fallen sharply, replaced by electronic systems such as debit cards, credit cards, and mobile payments. In many countries, cheques have become marginal or been phased out entirely. The spelling *cheque* (from French) became standard in the Commonwealth and Ireland from the 19th century, while American English retains *check* for both the financial instrument and other meanings.
- type
- Financial instrument
- first_known_use
- At least since the 9th century
- peak_usage
- Early 1990s
- related_terms
- Bill of exchange, negotiable instrument
- alternative_spelling
- Check (American English)
Lore & Background
Cheques have origins in ancient banking systems, where bankers issued orders called bills of exchange. Persian territories in the 3rd century AD issued letters of credit called čak, which evolved into the sakk used in the Abbasid Caliphate. The Persian poet Ferdowsi used the term 'cheque' in his Shahnameh. In the 13th century, Venice developed the bill of exchange for international trade. By the early 1500s, Dutch cashiers offered services paying money to anyone bearing a written order from a depositor. In the early 1600s, the Fula and other peoples of Senegambia used cheques valued in cattle.
Reader's Guide
Cheques were a transformative financial instrument, enabling payments without carrying large amounts of currency. Their use peaked in the early 1990s, with billions issued annually due to automated processing. However, they have since declined, replaced by debit cards, credit cards, and mobile payments. In many countries, cheques have become marginal or phased out. The spelling 'cheque' became standard in the Commonwealth and Ireland from the 19th century, while American English uses 'check'. The etymology traces to 'a check against forgery' and the chess term 'check' from Persian 'shah'.
A cheque is a negotiable instrument that instructs a financial institution to pay a specific sum from a transactional account held by the drawer. Both the drawer and payee may be individuals or legal entities. Cheques are order instruments, generally payable only to the named payee, though in some countries like the US the payee may endorse it to a third party. They are a type of bill of exchange, developed to avoid carrying large sums of money. The practice of issuing written payment orders dates back to ancient times: in Maurya India (321–185 BC), a commercial instrument called the *adesha* ordered a banker to pay a third party; ancient Romans used *praescriptiones* in the 1st century BC; and from the 3rd century AD, Persian banks issued letters of credit called *čak*, which evolved into the *sakk* used across the Abbasid Caliphate. By the 9th century, a merchant could cash a *sakk* drawn on a distant bank. In the 13th century, Venice developed the bill of exchange for international trade. In the early 1500s, Dutch cashiers began paying depositors’ written orders, keeping the note as proof. By the 17th century, bills of exchange were used for domestic payments in England, and cheques—initially called drawn notes—emerged. In the early 1600s, the Fula and other Senegambian peoples used cheques valued in cattle for trade with European merchants. Cheques became a highly popular non-cash payment method in the 20th century, with automated processing driving billions of annual issues until volumes peaked around the early 1990s. Their decline followed the rise of electronic systems like debit cards, credit cards, and mobile payments.
Did You Know?
- The oldest surviving complete American chequebook dates from the 1790s and was discovered by a family in New Jersey.
Frequently Asked Questions
What exactly is a cheque in banking terms?
A cheque is a negotiable financial instrument in which the account holder (the drawer) instructs their bank to transfer a stated sum from their transactional account to a designated payee. It functions as a written payment order rather than a direct transfer of cash.
How old is the concept of the cheque?
Written payment orders of this type have been in use at least since the 9th century, making the instrument far older than modern banking institutions. It evolved over centuries before taking the standardized form familiar in the 20th century.
When did cheque usage reach its peak?
Cheques hit their highest volume of use in the early 1990s, after which electronic payment systems gradually took over as the dominant non-cash method. By the 21st century, paper cheques had become a minority payment channel in most developed economies.
What is the difference between 'cheque' and 'check'?
They refer to the exact same financial instrument; the spelling simply reflects regional convention. 'Cheque' is standard in British and Commonwealth English, while 'check' is the American English spelling.
How does a cheque relate to a bill of exchange?
Both are negotiable instruments that direct a third party (typically a bank) to pay a specified amount to a named party. A cheque is essentially a specialized subset of the broader bill-of-exchange family, tied specifically to a demand deposit account at a financial institution.
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