Account Payee Only

Description

Being an "account payee only" is a phrase you might find on a check. It's important because it ensures that the Banking is full of rules and terminology as well as in money transfers to ensure the fast and safe arrival of money to the right people. One often finds ‘Account Payee Only’ on cheques and other negotiable instruments. This might sound harsh or complicated initially, but understanding this will be advantageous for you, securing your money and not allowing any fraud or error during payment.

This is called the ‘Account Payee Only’ crossing, and unless the payee mentioned won’t deposit that money in their account, the payee mentioned will receive the amount. Only endorses to pay a specific line since it cannot be cashed or deposited anywhere besides an account as it is crossed out.

This will make it more difficult to cash the check or pass it on to somebody else. In other words, it is a means by which to ensure that the money goes to the right person’s bank account.

Ways on How to Find Out What Cheque Crossing Is and What Its Types

You do not have to know how to cross a check to grasp “Account Payee Only.” Two lines, in the upper left hand corner or across the check, running parallel make up a crossing. They may or may not contain more information. These lines tell the banks what to do with the check.

There are two major types of crossings:

Special Crossing

Special crossings are those in which the name of a particular banker is written between the lines. For example ‘‘A/C Payee’’. The payee should put this type of check only into their account and not take it to any other bank. The words ‘& company’ or ‘bearer’ between the parallel lines mean that it is an open check or that whoever holds the check may cash it.

On-us Routing

Two such lines are found side by side, with the bank’s name written between them. Thus, it is payable through that bank only.

This crossing has the words “Account Payee Only” (or sometimes just “A/C Payee Only”) along with the two lines. This represents that the check will be deposited only into the mentioned payee’s bank account and cannot be endorsed and transferred to any other person.

Why would you need to use “Account Payee Only”?

To Protect It: Writing “Account Payee Only” on a check is for this particular purpose. It has a lot of good things like:

Preventing Fraud and Misuse

Because only the payee can deposit the check into his or her account, there will be little chance that the check will be misused or get into wrong hands.

Payee Protection

This endorses that once a check is written, the money will be received by the appropriate payee or payees.

Receipt

Well, receipt keeping is simplified since the money is transferred from the account of the payer’s bank to that of the payee.

Legal Position

All over the place, checks marked “Account Payee Only” enjoy this kind of particular legal protection. These instructions have to be followed by the banks as they are.

Carrying out salary payment to your employee or bill payments to service providers through a crossed check is a good practice of writing the check in favor of the payee and crossing it generally “Account Payee Only.”

Even holding the check, you cannot encash it over the bank counter. Such payee can receive the check but only after depositing it in his/her bank account.

No other person shall be able to encash or transfer the when lost or stolen which reduces losing your money to a thief.

The bank will cross-check the payee’s name with the name available in their account along with other account information before they are given the cash so that the directions are accurately adhered to.

Note

“Account Payee Only” is applicable but only recommended. You do not have to write this on your check but it is advisable and makes it more secure.

Crossing does not thus affect the validity of cashier’s checks or demand drafts, which ordinarily are drawn payable to a specific party and may be paid at any time.

Does Not Prevent Electronic Transfers

This pertains only to checks and other paper transactions. There are, of course, ways to ensure the security of electronic funds transfer.

When shall payee be the “Only Payee of an Account?

It is worth applying “Account Payee Only” crossing in such circumstances as:

• Wages: If an employer prefers handing over payment checks to employees then it is highly recommended for use in order to make certain that the checks are directly payable to the employees.
• Paying contractors or vendors: Unrestricted access to checks could allow forgery and other undesired actions.
• Utility bills and subscriptions: Mistakes in whom payment is being directed to would not be made. Passing someone a lot of money like this is secure.

What Happens If You Don’t Check “Account Payee Only”?

In case ‘Account Payee Only’ or a cross isn’t on the check, it becomes a bearer check, and so anyone who presents it can get it cashed. This makes it more likely that someone is going to come along and steal or commit fraud when the check is lost or stolen.

Add “Account Payee Only,” and you instantly protect both parties in any financial deal. Now, especially in the fast-moving realm of financial services today, safety is everything. Putting “Account Payee Only” on a check ensures that your money reaches the correct individual in a more secure way. It’s a most reliable mode of transaction by cheque, lowers the incidence of fraud, and provides both the paying as well as the receiving end a sense of safety.

Next time you ‘write’ or ‘get’ a check, consider the power in those two words. They’re not just words in a banking transaction; they provide safety when money is in motion.