Crossed Cheques: How Account Payee Only and Double Crossing Protect Your Funds

Table of Contents

What is Cheque Crossing?

Cheque crossing is a security feature that restricts how a cheque can be paid. When two parallel transverse lines are drawn across the face of a cheque, it becomes a "crossed cheque" and cannot be encashed over the counter—it must be deposited into a bank account.

Types of Crossing

General Crossing

A general crossing consists of two parallel lines drawn across the cheque's face. The space between the lines may be left blank or contain: - "& Co." - "Not Negotiable" - "Account Payee"

Effect:The cheque must be deposited into a bank account and cannot be encashed directly.

Special Crossing

In a special crossing, the name of a specific bank is written between the two parallel lines.

Example:Two lines with "State Bank" written between them.

Effect:The cheque can only be deposited at the specified bank. This adds another layer of security by restricting which institution can collect the cheque.

Account Payee Crossing

The words "Account Payee" or "A/C Payee Only" are written within the crossing.

Effect:The cheque can ONLY be deposited into the account of the named payee. It cannot be endorsed to another party. This is the most restrictive and secure form of crossing.

Not Negotiable Crossing

The words "Not Negotiable" appear within the crossing lines.

Effect:The cheque can still be transferred, but the transferee doesn't get better title than the transferor. If the cheque was stolen, the subsequent holder has no legal claim to the funds even if they received it in good faith.

How to Cross a Cheque

Proper Crossing Technique 1. Draw two parallel lines (vertical or diagonal) across the cheque face 2. Lines should span a significant portion of the cheque 3. Write any additional words clearly between the lines 4. Use permanent ink that cannot be erased

Who Can Cross - The drawer when issuing the cheque - The holder before depositing - The collecting bank as agent for the holder

Why Crossing Matters

Security Benefits 1. Audit Trail Payment goes through banking channels, creating a record 2. Theft Protection Stolen cheques cannot be easily cashed 3. Fraud Prevention Adds barriers against unauthorized encashment 4. Liability Protection Demonstrates due diligence in payment security

Practical Example Consider a salary cheque stolen from the mail. Without crossing, the thief could present it at a bank counter and receive cash. With "A/C Payee Only" crossing, the thief cannot cash it without having an account in the payee's name—a significant barrier.

Legal Framework

Banker's Protection Banks are protected when they collect crossed cheques in good faith and without negligence. However, they must - Ensure the cheque is deposited, not cashed - Follow any special crossing instructions - Verify account payee instructions

Drawer's Rights Once a cheque is crossed, the crossing cannot be cancelled except by the drawer. Even then, "Account Payee" crossings are generally considered irrevocable.

Best Practices for Businesses

Issuing Cheques 1. Pre-print crossings on all business cheques 2. Use "A/C Payee Only" for vendor payments 3. Add special crossing for sensitive payments 4. Train staff on crossing requirements

Receiving Cheques 1. Verify crossing before accepting 2. Request crossed cheques from payers 3. Return uncrossed high-value cheques with crossing request 4. Document crossing instructions in payment terms

Common Mistakes to Avoid

1Crossing after signing: Always cross before signing
2Unclear crossing: Lines should be visible and permanent
3Partial crossing: Lines should clearly span the cheque
4Ignoring A/C Payee: Never try to transfer such cheques

Conclusion

Crossing is one of the simplest yet most effective security measures for cheque payments. For business cheques, "Account Payee Only" crossing should be standard practice, providing maximum protection with minimal inconvenience.