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. Cheques became a highly popular non-cash payment method during the 20th century, with usage peaking in the early 1990s, before being largely replaced by electronic payment systems.
- 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'.
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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