What Are Checks?

What are checks? A bank check is a piece of paper used as currency in a financial transaction. According to Gwen Evans, a banking professional with ten years experience in the industry, "bank checks are...

According to Gwen Evans, a banking professional with ten years experience in the industry, "bank checks are paper based instruments used to withdraw funds from a demand deposit account".


A bank check is a piece of paper used as currency in a financial transaction. It is used in lieu of money, more specifically, in lieu of cash. At one time, probably pre-historic times, conch shells were used at money and were traded for goods and services. Over time, items that are more precious were used, like gold, for instance. Eventually money developed into sophisticated international banking systems. Today, in the United States most banking transactions involve checks.




Italian bankers originally invented modern double entry bookkeeping and the notion of a check. It was introduced as a document that authorized the withdrawal of a specified amount of money to the bearer. Because of the unrelenting threat of forgery, checks did not become a reality until late in the 14th century, after which adequate safeguards were developed.

One of the safeguards currently used to prevent check forgery is specially treated paper. Additives used during the papermaking process and surface treatments promptly reveal any attempts to modify a check. This paper, called safety paper, may include a fine printed pattern on the surface.

Though checks are an easy an efficient way to transfer money from one person the anther, the process can be slow, according to today's standards. First, the owner of a checking account writes, dates, and signs a check. Next, he or she presents it to the person to whom money is due. A check (also called an instrument) contains an unconditional order from the drawer that directs a bank to pay a definite amount of money to a payee. The payee presents the check to the drawee, or bank, which pays the designated sum to the holder and cancels the check. Finally, the cancelled check is returned to the drawer as a receipt.

Over the years, many improvements have been made to checks that expedite the processing of check. To continue to prevent fraud, any attempts to speed up the transfer of money using checks must be handled carefully and cautiously. Many checks have a numerical code printed on them that identifies the bank, and the account holder. The ink used is called magnetically active ink. The printed numbers enable the bank to clear checks mechanically in order to speed up operations. Before the bank will pay the check, it must recognize the drawer's signature and have confidence in the person presenting the check for payment. Once the bank hands the money over to the payee, it then becomes liable if the check is fraudulent.
Should a bank refuse to honor a check due to insufficient funds, the payer is held responsible to honor the check. This is so because writing a check constitutes signing a legal binding contract to pay. If the lack of funds is due to bank error, the payee must be able to negotiate with the bank to prove this. In most cases, the bank will fix the error and make restitution to the damaged parties.

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