What is the purpose of crossing a cheque ‘A/C Payee Only’ or ‘A/C Payee’?

Adding a crossing to a cheque increases its security in that it cannot be cashed at a bank counter but must be paid into an account in exactly the same name as that which appears on the ‘payee’ line of the cheque (i.e. the person who has received the cheque, who is legally the “payee” and “holder” of the cheque).

What does the term “payee” mean?

It means the intended recipient of the cheque – the person or business to whom the payer makes the cheque payable.

Are all cheques crossed?

No. Cheques that are not crossed still exist but they are no longer commonplace because of their lack of security. A cheque which has no crossing at all is called an open cheque.

If crossing a cheque is a fraud protection measure, then why aren’t all cheques crossed?

It is standard practice for banks to issue chequebooks with cheques crossed ‘A/C Payee Only’ or ‘A/C Payee” but ultimately this comes down to customer choice. Customers who specifically request a chequebook with open cheques may have their own good reasons for doing so, but their bank will explain the possible risks.

Can a crossed cheque be endorsed by the recipient and paid into an account other than the one named in the payee line?

Not if it is crossed ‘A/C Payee Only’ or ‘A/C Payee’. The Cheques Act 1992 and Section 81 of the Bills of Exchange Act 1882 give statutory power to the ‘A/C Payee’ and ‘A/C Payee Only’ crossing, when it is used. The legislation means that a cheque which bears the ‘A/C Payee’ or ‘A/C Payee Only’ crossing can only be paid into an account in the name of the receiver of the cheque exactly as it appears on the cheque.

Can a crossed cheque be ‘uncrossed’ by the payer - or the recipient of the cheque - (for instance, by writing ‘crossing cancelled’ on the cheque) and then cashed over the counter by the recipient?

No, the recipient of the cheque (sometimes called the “payee”) cannot remove a crossing from a cheque nor can the cheque be transferred over to a third party. It cannot be cashed over the counter by the payee; it must be paid into an account in the same name as that appearing in the payee line of the cheque.

Legally, if you have written the cheque you are entitled to ‘uncross’ the cheque by writing CROSSING CANCELLED over the crossing and then signing it, but it is not recommended that this is done as it removes your legal protection against fraud and loss.

Could someone who is in possession of a cheque cancel the crossing, change the recipient’s name and initial the cheque in order to pay it into an account it’s not intended for?

Not where the cheque is crossed. With regards to a cheque crossed ‘A/C Payee Only’ or ‘A/C Payee’ the relevant legislation means that a cheque that bears one of these crossings can only be paid into an account in the name of the person who has received the cheque (the payee) exactly as it appears on the cheque.

Any alteration or attempt at alteration of the crossing would be treated with caution by a bank as it could be a fraudulent.

Is there a difference between a cheque being crossed and marked ‘A/C Payee Only’ or ‘A/C Payee’ as opposed to just being crossed and having no wording printed on it?

There are four types of crossing that have varying degrees of security but the most secure, and the most commonly used crossing today, is the ‘A/C Payee’ or ‘A/C Payee Only’ crossing and it is the only crossing which is backed by legislation.

The four different types of crossing are:

  • The ‘A/C Payee Only’ or ‘A/C Payee’ crossing: This crossing is a protection against fraud and indicates that the cheque must be paid in to an account in the name of the payee exactly as that name appears on the cheque. This crossing is the only crossing to carry statutory force wherever it is present.
  • General Crossing: This crossing is also a protection against fraud and is placed on the cheque by the payer (legally the “drawer” or payee (legally a “holder”) and indicates that the cheque must be paid to a banker. However, this crossing carries NO statutory force.
  • Special Crossing: This crossing provides another layer of security against fraud in that the special crossing requires the cheque to be paid not simply to any banker but to the named banker. This crossing carries NO statutory force.
  • Not Negotiable: This crossing is used to indicate that the cheque should not be transferred from one person to another. It is not commonly used nowadays having been replaced by the more secure ‘A/C Payee’ or ‘A/C Payee’ only crossing. This crossing carries NO statutory force.
What is the reason for having a cheque that is crossed but doesn't have 'A/C Payee Only' or 'A/C Payee' printed on it?

This describes a general crossing, which was the forerunner of the ‘A/C Payee Only’ crossing. A general crossing does not have the benefit of statute and can be ‘opened’ (i.e. deleted) by the payer (i.e. the “drawer” in legal terminology) of the cheque provided he adds his full signature to the act of opening/deleting the crossing. In practice, today’s bank cashier is likely to view such amendments with caution given that they are rarely seen.

Is there any situation where a crossed cheque can be paid into the account of someone other than the named payee or recipient?

Not for a cheque crossed ‘A/C Payee Only’ or ‘A/C Payee’. The Cheques Act 1992 and Section 81 of the Bills of Exchange Act 1882 give statutory power to the ‘A/C Payee Only’ or ‘A/C Payee’ crossing when it is used. The legislation means that a cheque which bears the ‘A/C Payee Only’ crossing can only be paid into an account in the name of the person who has received the cheque (i.e. the payee) exactly as it appears on the cheque.

If I have received a cheque made payable to me that isn’t crossed or marked ‘A/C Payee Only’ or ‘A/C Payee’ can I cross it and write ‘A/C Payee Only’ on it myself?

Yes. Section 77(2) of the Bills of Exchange Act 1882 specifically allows both the receiver (i.e. payee or holder) of an uncrossed cheque to add a crossing. Moreover, the addition of the words ‘A/C Payee Only’ should not be considered a material alteration of the cheque. If you cross the cheque and write ‘A/C Payee only’ you are merely ensuring that payment is made for your account.

If a cheque crossed ‘A/C Payee Only’ or ‘A/C Payee’ has to be paid into a named account how can I cash a cheque over the counter?

It may be possible for a customer to cash one of their own crossed cheques over a bank counter if they go into their own bank as the bank will be able to identify them as one of their own customers but this service is not always offered. Customers would generally find it more convenient to obtain cash over the counter by means of their debit card.

Can a crossed cheque be cashed at a cheque cashing shop such as ‘The Money Shop’?

Cheque cashing shops have special arrangements with their own bank to pay in cheques to their account where the cheques themselves are made payable to other people. The cheque cashing agencies will have already cashed the cheques for the person who has received the cheque (that is the person named in the payee line). There is a charge for this service which means that the person to whom the cheque was made payable will get back less cash than the face value of the cheque.

The cheque cashing agency will have lost the protection of the crossing and the arrangement with its own bank is that it is liable for any loss in the event that these cheques are unpaid (i.e. they ‘bounce’).