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Recently, I had some troubles, mostly caused by my ignorance on the topic of cheques, with cheques in Australia. I am from central Europe, and for most people of my age, cheques are a thing known from books and TV, but not from real live.

My problems arose from my false assumption that I can cash-out cheques without the need to have a bank account. As it turned out, I needed a bank account to cash-out the cheques. In metropolitan/suburban Melbourne the banks generally don't simply pay out a cheque in cash.

Now, my question: Assuming a bank account is strictly required to transfer money via a cheque, aren't cheques then obsolete at all? If both involved parties have a bank account, they can simply do a wire transfer (bank to bank) instead of having a cheque (bank -> piece of paper -> bank)?

How common is it in countries that widely use cheques that both involved parties need a bank account?

Dohn Joe
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  • Are cheques widely used in Australia? I've been here almost a year and I've never encountered them. – jcm May 02 '18 at 08:04
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    This is quite broad. Cheques [or checks] are common in quite a few countries. It also depends on the type of cheque issued, bearer cheques don't need account; anyone in physical possession of the paper can covert to cash in the specified bank/branch. Account Payee cheques need to be deposited to account. – Dheer May 02 '18 at 08:44
  • Cheques are not used much in Australia but are still used every now and then. I have a cheque book and probably write about 2 to 3 cheques per year. Usually it delays the funds coming out of my account for a day or two until it finally gets banked. – Victor May 02 '18 at 11:56
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    Re "...they can simply do a wire transfer...", doing a one-time electronic transfer is NOT simpler than writing a check. – jamesqf May 02 '18 at 18:25

1 Answers1

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This answer is not specific to Australia. I am from a country where checks are used heavily, especially in business and other transactions. In the context of checks, 2 variants are more popular than others viz.

  1. Bearer/Payee Checks
  2. Account Payee Checks (crossed checks)

The bearer/payee check is used by writing the name of the payee (for payee checks) and the payee or a bearer (for bearer no name is written) can cash it directly at the bank counter by showing an accepted ID proof.

On the other hand, an account payee check has two line marks on top left corner (usually) and the 'bearer' work in the check is canceled out. This type of checks can only be deposited in a bank account of the payee and cannot be cashed at the counter.

This link provides an image of each of the check types.

Both the check types are used extensively in the country I am from.

Ironluca
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  • In the UK it works differently. Cheques could be exchanged at a bank for cash by the payee unless the payer had drawn two lines vertically on the cheque and written "account payee" between them. In that case they can only be paid into a bank account. Banks started issuing cheque books with "account payee" preprinted on them. Nowadays, use of cheques is very rare in the UK, they were to be phased out completely but have been retained for use by people without access to online banking. – RedGrittyBrick May 02 '18 at 10:11