There is no overseas cross-border cheque clearing system. A foreign cheque is a cheque issued in a foreign currency and payable at a foreign bank.
Therefore, for payment purposes, foreign cheques payable to recipients in this country have to be sent abroad to the bank where the payer holds their account. This process often takes several weeks and can be expensive as it is done on a cheque-by-cheque basis. This process is called “collection” (as in collection of funds).
Yes, some banks do, subject to recourse. This means that your bank allows you to withdraw the money before the cheque is cleared and paid, but it will take the money back from you if the cheque subsequently bounces. As there are no fixed timescales, this might happen several weeks later. This service is known as “negotiation”.
There is a fee for both collection and negotiation.
You will need to ask your bank or building society if it provides value straight away on a foreign cheque. Most do but the charges vary from bank to bank.
Yes. By the time your bank has received payment from the overseas bank, the exchange rate may have changed so you may get less money than would have been the case on the day the cheque was paid in.
Charges for cross-border cheque payments vary between banks. You should ask your own bank for more information.
No, they don’t. The next weekday timescales are only for sterling cheques drawn on UK banks paid into UK-based sterling current or basic bank accounts.
Yes, but only if the cheques are drawn on UK banks. Some banks offer customers euro-denominated cheque services - generally this means euro cheques as part of a UK euro bank account. These cheques can only be used in the UK and are processed by means of direct exchange and settlement between the relevant banks.
No - because there is no centralised clearing system for overseas cheques there are a number of different ways of obtaining payment so each cheque is processed separately and timescales will vary.
There is no agreed maximum or minimum timescale, so “collection” (where you do not get the funds until your own bank has received the funds) takes weeks and sometimes months. With the service known as “negotiation”, whilst you will receive the money much more quickly, but your bank has a right of recourse, which gives it the right to take the money back from you if the cheque subsequently bounces. Again this can take weeks or even months.
In the case of cheques drawn on banks in the US, funds can be recalled any time up to six years after payment to the receiver has been made (as per the Statute of Limitations).
No, that is the risk that you take when you accept a cheque drawn on an overseas bank. The Cheque and Credit Clearing Company’s advice has always been that you shouldn't accept a cheque from someone you don't know or trust and this includes foreign cheques.
As this is a competitive issue no industry figures exist regarding the charges levied on customers whose cheques are returned unpaid. However, it is normal practice for charges to be levied on both the payer by the payer's bank and on the recipient, by the recipient's bank.
No, they can’t. Cheques written on sterling or euro accounts with UK banks, are intended solely for use in the UK (plus Gibraltar, the Isle of Man and the Channels Islands), and if paid into an account with an overseas bank they would need to be sent back to the UK on a collection basis for payment. This process often takes several weeks.
There are a variety of methods for making payments abroad, from using cash to making an electronic transfer between bank accounts. There are also some more specialist services such as online currency brokers. Information about overseas payments is available at the Payments UK’s Pay Your Way website at www.payyourway.org.uk.
If you are owed payment from an overseas' account holder, you can ask to be paid by means of an automated payment to your bank account. Typically, if the payment is being made to you within the euro zone the payer will need to know your IBAN (International Bank Account Number) and your bank's BIC (Bank Identifier Code). IBANs and BICs are the internationally recognised identifiers, which act in a similar way to the bank account number and domestic sort code - standardising the information shared across Europe. You’ll find these details on your bank statement.
You can, of course, also speak to your bank to discuss the best option for you.
No. Cheques were never intended to be used as cross-border payment instruments. The legislation governing cheques differs from country to country, and it has been specifically excluded from EU legislation (the Payment Services Directive) because of the low and reducing volume of cheques being written.
Yes - bankers' drafts can be drawn in most major currencies. An international draft is a banker’s draft made out to the recipient and payable at one of your bank's agent banks overseas. You will be asked to pay up front for the draft. You need to bear in mind that the draft might get lost or stolen so you might prefer to ask your bank to send an automated payment instead. To find about more about how to make an automated payment abroad, go to the Pay Your Way website at www.payyourway.org.uk and click on International Payments.
If you are living or working overseas, migrating to another country, or making a foreign purchase, finding the best exchange rate, lowest fee and the fastest way to transfer your money can be a time consuming exercise. Information about overseas payments is available at the Pay Your Way website at www.payyourway.org.uk.
You can, of course, also speak to your bank to discuss the best option for you