The glossary explains many of the terms that are used on this website. If you can’t find the term you’re looking for, please contact us at

An agreement in which a bank, building society or other authorised payment service provider, obtains access to one or more payment systems through a Sponsor Bank. (Also referred to as an Agency Agreement.) In the cheque and credit clearings such an arrangement allows the agency to obtain clearance and settlement of cheque and credit items on behalf of themselves and their customers.

An automated payment is a payment made by electronic transfer directly into a bank account. Online and mobile banking as well as telephone payments mostly use the Faster Payments Service. Bacs Direct Debits and Direct Credits are processed through the automated Bacs central infrastructure. The Faster Payments Service, which is a same day service, is used for standing order payments.

The payment system which processes payments through two principal electronic payment schemes: Direct Debit and Bacs Direct Credit. The payment system is operated by Bacs Payments Schemes Limited (BPSL).

A paying-in slip used by a customer to pay cash or cheques into a bank account. BGCs are commonly found in the form of tear-off strips at the bottom of utility, telephone and other regular bills. They may also be found in the back of chequebooks. 

A BGC is addressed to a bank branch instructing it to credit a specified sum of money to a named account at that branch. It bears the money mark logo next to the words “bank giro credit.”

A BGC 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 a cheque. 

Formally declared holidays when banks are officially closed. Usually, but not always, the clearing of cheques does not operate on a bank holiday. However, bank holidays differ across the UK and your bank will advise you if a bank holiday in England and Wales, Scotland or in Northern Ireland will impact on the timescales for clearing your cheque.

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 chequebook facilities.

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. They are cleared in the same way as a cheque. The customer pays for a banker’s cheque or draft at the time it is issued. This means that the recipient can be certain that funds will clear but they will still need to wait until the end of working day six to be sure that the cheque or draft is genuine.

The person or business to whom the cheque is payable. Other terms meaning the same are recipient and payee.

The bank that provides the account for the recipient of the cheque into which the cheque is deposited.

A bounced cheque is one “returned unpaid” from the paying bank, normally because the payer does not have sufficient funds in their account.

Clearing House Automated Payment System: A guaranteed (real-time gross settlement) same-day service for the electronic transmission of sterling-denominated payments within the UK. It is often used for large purchases, for example when buying a house. There is usually a charge for the service.

The organisation that provides the central payment system services for the exchange and settlement of cheques and credits. It also manages the operational processes of these services to ensure that cheques and credits remain a viable, secure and efficient choice of payment for everyone who uses them.

The processing system managed by the Cheque and Credit Clearing Company, which clears paper cheques that have been paid into customers’ accounts.

The time taken from when the bank receives a cheque that a customer has paid into their account, through to the point at which the money is available for withdrawal and the customer can be certain that their cheque won’t bounce.

The vast majority of cheques are crossed "a/c payee", which means 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.

The process that enables digital images of cheques to be exchanged between banks and building societies - through the Image Clearing System - for clearing and payment.

The scheme to which all cheque printers must be members. CPAS is managed by the Cheque and Credit Clearing Company and it requires that all cheques are printed to strict security standards by an accredited printer.

The process of transmitting, reconciling and confirming cheque or credit payment messages prior to settlement, including the netting of payment messages and the establishment of final positions for settlement.

The point at which a cheque has been processed through the cheque clearing process, the funds are available for withdrawal and the customer can be certain that the cheque will not bounce (unless they are a knowing party to a fraud).

From the cheque recipient’s perspective this is the point at which funds from the paid-in cheque start earning credit interest or, if the account is overdrawn, start reducing the balance of the overdraft. Although included in the account balance and shown on the statement or cash machine slip, the funds may not yet be available to withdraw.

The point at which funds deposited by cheque are available for withdrawal from the recipient’s account (either as cash or to fund another payment from the account). The ability to withdraw is subject to the overall status of the account (e.g. the balance after the withdrawal remains within an agreed overdraft limit, or daily cash withdrawal limits). At this stage the cheque may still be returned unpaid and the recipient’s bank may still reclaim the money from the cheque until clearing for fate has been reached.

Cheque number, bank sort code and account number printed along the bottom of a cheque and read electronically.

The bank where the cheque is deposited (i.e. paid in). It is often, but not necessarily, the same as the recipient’s bank.

An operational arrangement in Great Britain for the exchange and settlement of bulk Bank Giro Credits and other paper credits between settlement members.

The Current Account Switch Service is a free service that lets you switch your current account from one participating bank or building society to another. It has been designed to be simple, quick and stress-free and is backed by the Current Account Switch Guarantee:

See ‘Paid in’

The methods made available to a customer to deposit a cheque, which can vary from bank to bank. This is typically, but not limited to: branch counter; ATM (or similar self-service machine); Post Office outlet; post; mobile banking app or desktop scanner (for cheque imaging).

Means "paid in" when referring to a cheque or cash.

A device that creates a digital image of a paper cheque.

An electronic credit to a customer's account initiated directly by the payer. Direct Credits can be business-to-individual payments for wages, salaries, pensions, state benefits and tax credits, payments initiated by businesses to pay their trading partners, or payments initiated by individuals to pay bills.

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.

The Faster Payments Service is the payment system that provides near real-time payments. It is operated by the Faster Payments Scheme Limited (FPSL). The Faster Payments service enables banks to process one-off payments made over the internet or by phone within a couple of hours, 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 also speeds up standing order payments, enabling them to be cleared on the day they are sent on bank working days.

The processing system through which digital images of cheques are exchanged and cleared between banks and building societies for payment.

A secure electronic network used to transmit codeline and amount details of cheques from the collecting bank to the paying bank.

The process of clearing payments between two settlement members.

Also known as intra-bank clearing. The process of clearing payments between branches or agencies of the same settlement member.

Cheques may be paid in (i.e. deposited) to a recipient’s account by a variety of means (see ‘Deposit channel’). Normally, for a bank or building society counter deposit the “day of deposit” will be the same day, if the cheque is paid in on a weekday before that bank or building society’s advertised cut-off time. (If a cheque is deposited on a weekday after the bank or building society’s advertised cut-off time then the “day of deposit” will be the next weekday.)

For postal deposits and cheques paid in at a Post Office counter, the “day of deposit” will normally be the day the cheque is received by the recipient’s bank, and not the day the cheque is posted to the bank or the day it is paid in to the Post Office.

The beneficiary or recipient of the cheque in to whose account the cheque is paid.

The person, business or charity that writes and issues the cheque.

The bank or building society where the person, business or charity who wrote the cheque holds their account.

As under s.42(5) FSBRA, a PSP, in relation to a payment system, means any person who provides services to persons who are not participants in the system for the purposes of enabling the transfer of funds using the payment system.

The person, business or charity who receives the cheque and to whom the cheque is payable. Also called the beneficiary or payee.

The bank or building society where the recipient of the cheque holds their account.

See ‘Scanning’.

See ‘Scanning’.

If the payer’s bank is unwilling to pay a cheque, it will be returned unpaid to the recipient. 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 recipient's account by the recipient’s bank - this may be after the funds have been withdrawn by the recipient but it will be before the end of working day six after paying in the cheque.

This is the process when a business or charity customer uses a desktop scanner connected to their online banking to create and pay in an image of cheque for their bank to process and clear.

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.

A settlement service provider is appointed to provide settlement services to the Cheque and Credit Clearing Company and/or 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 sterling cheque clearing system and the credit clearing system. The euro debit clearing is settled via euro account and payment services provided by JP Morgan.

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 - Automated Processing of Vouchers (Debits) and all Bank Giro Credits must be printed according to C&CCC Standard 3.2 - Automated Processing of Vouchers (Credits).

A cheque that the person who wrote it has asked its bank not to pay. The payment of the cheque has been prevented.

A cheque that has been returned unpaid to the recipient’s bank by the payer’s bank, normally because the payer does not have sufficient funds in their account. It is also known as a bounced cheque.