Glossary
Our glossary explains many of the terms that are used on our website. If you cannot find the term you are looking for, please contact us at info@chequeandcredit.co.uk
Agency arrangement
An arrangement provided by a Settlement Member to a non-settlement institution, allowing the latter to obtain clearance of cheque and credit items on behalf of themselves and their customers.
Automated payment
An automated payment is a payment made by electronic transfer directly in to a bank account. Internet and phone payments,as well as direct debits,direct credits and standing orders are currently processed through the automated Bacs central infrastructure. From May 2008,a new faster payments service will be launched that will offer a same day service for phone, internet and standing order payments.
Bank Giro Credit
A paper item, which conforms to Cheque and Credit Clearing Company's Standard 3.2, addressed to a bank branch instructing it to credit a specified sum of money to a named account at that branch. A bank giro credit is not a payment instrument, i.e. it cannot be used on its own to make a payment but must be accompanied by cash or cheque. Bank giro credits are most often found at the bottom of utility, telephone and other regular bills.
Basic bank account
An account designed for those who may not meet a bank's criteria for opening a standard current account and/or who need to ensure that they cannot be overdrawn. Features typically include the ability for payments, e.g. pensions and benefits, to be credited direct to the account, withdrawals by plastic card through cash machines and the facility to pay bills by direct debit. It does not provide overdraft or cheque book facilities.
Banker's draft and banker's or building society cheque
A banker's cheque is a cheque drawn directly on the issuing bank (or building society if it is a building society cheque) rather than on the account of a customer,and signed by a bank or building society official. A banker's draft is not strictly speaking a cheque but, like a cheque, it is subject to the Bills of Exchange Act 1882,and is cleared in the same way as a cheque. When issuing a banker's cheque or draft, the bank will debit the ordering customer's account, so that the payee can be assured that the cheque or draft will not be returned unpaid due to lack of funds. This means that,provided the cheque or draft is genuine, the recipient can be certain that funds will clear. The timescales for clearing for value,withdrawal and fate apply.
Beneficiary
The person or business to whom the cheque is payable. Another term meaning the same is payee.
Beneficiary bank
The bank that provides the account for the payee of the cheque to which the cheque is deposited.
Bounced
Customers often use this term, whereas the bank refers to a cheque being "returned unpaid".
CHAPS
A guaranteed real-time gross settlement same-day service for the electronic transmission of sterling-denominated payments within the UK.
Cheque clearing system
An operational arrangement in Great Britain for the exchange and settlement of bulk paper cheque payments between Settlement Members.
Cheques crossed "a/c payee" or "account payee"
The vast majority of cheques are crossed "a/c payee",which means that they must be paid in to the account of the named beneficiary (i.e. the person to whom the cheque is made payable). This prevents cheques being cashed or paid in to the accounts of third parties. The issue of cheques crossed "account payee" is covered in the Cheques Act of 1992,Section 1 which gives statutory force to the crossing.
Cheque guarantee card
Also know as a cheque card. A card issued by a bank or building society for the purpose of guaranteeing payment by, or supporting the encashment of, a cheque up to a specified value (£50, £100 or £250), providing the scheme's conditions of use have been followed.
Clearing for fate or cleared for fate
The point at which funds from a cheque have cleared and the cheque can no longer be returned unpaid and the beneficiary can be sure the money is theirs and cannot be reclaimed from their account (unless they are a knowing party to a fraud). Conversely, the fate of a cheque may be that it is returned unpaid - but the beneficiary will be able to determine if this is the case by the time clearing for fate or certainty is provided.
Clearing for withdrawal or cleared for withdrawal
From a beneficiary's perspective the point at which funds deposited (i.e.paid in) by cheque start earning credit interest or, if the account is overdrawn, start reducing the balance on which overdraft interest is charged. Although included in the account balance and shown on the statement or cash machine slip, the funds may not yet be available to withdraw. From a cheque issuer's perspective,when funds paid by cheque stop earning credit interest or, if the account is overdrawn, increase the balance on which overdraft interest is charged.
Codeline data
Cheque number,bank sort code and account number printed along the bottom of a cheque and read electronically.
Collecting bank
The bank where the cheque is deposited (i.e.paid in). It is often,but not necessarily, the same as the beneficiary bank.
CPAS
This is the Cheque Printer Accrediation Scheme of which all printers must be members. The scheme is managed by the Cheque and Credit Clearing Compay and it requires that all cheques are printed to strict security standards.
Cheque Printer Accreditation Scheme
See CPAS above.
Credit clearing system
An operational arrangement in Great Britain for the exchange and settlement of bulk Bank Giro Credits and other paper credits between Settlement Members.
Deposited
Another term meaning "paid in" see below.
Direct credit
An electronic credit to a customer's account initiated directly by the payer. Direct credits consist primarily of business-to-individual payments for wages, salaries, pensions, state benefits and tax credits, and payments initiated by businesses to pay their trading partners or by individuals to pay bills.
Direct debit
A pre-authorised debit on the payer's account initiated by the payee (known as an originator). Direct debits are typically used to make regular payments for debts such as utility bills and insurance payments and amounts may be variable.
Domestic Cheque Guarantee Card Scheme
A UK scheme whose members issue cheque guarantee cards to personal customers to guarantee the holder's cheques up to a specified amount, providing the scheme's conditions of use have been followed, and providing common, easily identifiable design features to simplify acceptance procedures.
Euro debit clearing system
An operational arrangement in Great Britain for the exchange and settlement of bulk euro-denominated cheques drawn on a GB account between Settlement Members.
Faster Payments Service
The Faster Payments Service enables bank to process one-off payments made over the internet or by phone within a couple of hours, not days, benefiting customers by speeding up the clearing of their payments. Customers are able to make internet and phone payments outside of banking hours even at the weekend. The service is also speeding up standing order payments, enabling them to be cleared on the day they are sent on bank working days.
IBDE (Inter-Bank Data-Exchange)
A secure electronic network used to transmit codeline and amount details of cheques from the collecting bank to the paying bank.
Inter-bank clearing
The process of clearing payments between two Settlement Members.
Inter-branch clearing
Also known as intra-bank clearing. The process of clearing payments between branches or agencies of the same Settlement Member.
Paid in
Cheques may be deposited (i.e.paid in) to a beneficiary's own account by a variety of means:at a branch counter, through a cash machine or other accepting machine,at a post office or by post. Normally for a counter deposit the day of deposit will be the same day, if deposited before the advertised cut-off time for that counter (and the next working day if after the cut-off time). For postal deposits it will normally be the day the cheque is received by the bank. Every bank will make clear the day a cheque is considered to have been deposited for the purposes of calculating the elapsed time before value, withdrawal or fate.
Payee
The beneficiary of the cheque in to whose account the cheque is paid.
Payer
The person or business that writes and issues the cheque,whose name is on the bottom of the cheque and whose account will be debited when the cheque is paid.
Paying bank
The bank where the person or business who issued a cheque holds their account.
Returned unpaid
If the paying bank is unwilling to pay the cheque, it will be returned unpaid to the beneficiary customer via the beneficiary bank. There are a number of reasons why this may happen. For example, there may be insufficient funds in the payer's account, the cheque may be fraudulent,or it may be wrongly dated or unsigned. When a cheque is returned unpaid its value may be reclaimed from the beneficiary's account by the beneficiary bank - this may be after the funds have been withdrawn by the beneficiary.
Settlement Member
A member of the cheque clearing and/or credit clearing and/or euro clearing who settles through the settlement service provider for the values of the cheque, credits and/or euro payments made to or received from the other settlement members.
Settlement Service Provider
Settlement Service Provider means any bank that is appointed to provide settlement services to the Cheque and Credit Clearing Company and the Settlement Members for the purpose of enabling the Settlement Members to settle amounts and make payments due in respect of the clearings in which they operate. The Bank of England is the Settlement Service Provider for the cheque clearing system and the credit clearing system. The Central Bank and Financial Services Authority of Ireland is the Settlement Service Provider for the euro debit clearing system.
Standard
A standard is an agreed, repeatable way of doing something. It is a published document that contains a technical specification or other precise criteria designed to be used consistently as a rule, guideline, or definition. In Great Britain, all cheques must be printed according to C&CCC Standard 3.1 and all Bank Giro Credits must be printed according to C&CCC Standard 3.2.