An Account Payee Cheque is a very safe sort of check because the money can only be placed in the payee’s account. This cheque cannot be signed by anybody other than the payee. To grasp the notion, one must first comprehend the distinctions between a drawer, drawee, and payee.

• A drawer is a person who writes and signs a cheque; often, it is the person who owns or is an authorized signatory for the account from which the funds will be withdrawn.
• The drawer’s payee is the person to whom the cheque is written. The bank is normally the drawee, and the drawer instructs the bank to withdraw the specified amount.
• A payee is the person or entity to whom the final payment is made, and whose name is inscribed on the cheque.

Steps to write a Payee Cheque

1. To make an account payee cheque, cross two lines on the left corner of the check and write “Account Payee” between them.
2. Remember that if you only cross the cheque without writing “Account Payee,” it will be a crossed cheque, not an account payee cheque.
3. A crossed cheque differs from an account payee cheque in several ways. As a result, the first should not be mistaken with the second.

Dissimilarities between bearer cheque, order cheque and crossed cheque

An account payee cheque’s definition has already been provided. The following are the definitions of various sorts of cheques.

• Crossed Cheque– A crossed cheque is one whose proceeds can only be deposited into the account of the payee. Such cheques, on the other hand, can be endorsed by the payee to a third party, who can then endorse it to someone else. By writing the endorsee’s name on the check and signing on the reverse of the cheque leaf, you can make this endorsement.
• Bearer Cheque-Every cheque is a bearer cheque unless the term bearer is crossed on it or another form of crossing is done on it. The individual who holds such a cheque can cash it over the counter. This form of cheque is extremely insecure and can be used fraudulently if lost. Furthermore, these cheque do not need to be endorsed and can be quickly given to a third party.
• Order Cheque- An order cheque is one that has the phrase ‘Bearer’ crossed off and the words ‘to Order’ written on it. This sort of cheque has comparable properties to a bearer check, however it cannot be endorsed simply by giving it over to another person. In order for it to be valid, it must be properly signed and endorsed.

In terms of endorsement, an account payee cheque differs from a crossed cheque and an order check, and it is the polar opposite of a bearer check. While the most prone to fraud is the bearer check, an account payee cheque is a highly safe document.

Merits of Payee Cheque

The primary reason for the popularity of writing an account payee cheque is that it is the safest type of cheque.

1. Because the money will only be placed into the payee’s account, there is very little danger of it being misappropriated.
2. Furthermore, the payee is unable to endorse the cheque to anybody else, thus enhancing the security of these cheque.
3. Another thing to keep in mind concerning account payee cheque is that they are only good for three months.

Conclusion

By writing “Account Payee” or crossing it twice with two parallel lines on the left-hand side top corner, a bearer cheque becomes an account payee cheque. The funds will be deposited into the account of the person whose name appears on the cheque. It is also known as a crossed cheque and is considered the safest type of cheque.