Bearer Cheque vs. Order Cheque — What's the Difference?
By Tayyaba Rehman — Published on October 10, 2023
Bearer Cheque is payable to the person presenting it, while an Order Cheque is payable to the person named, requiring identification for cashing.
Difference Between Bearer Cheque and Order Cheque
Table of Contents
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Key Differences
A Bearer Cheque, when presented for payment, does not require verification of the bearer’s identity. In contrast, an Order Cheque ensures that the payment is made only to the specified person or entity whose name is mentioned on the cheque.
The Bearer Cheque is considered to be a more risky instrument due to its ease of transferability, while the Order Cheque provides a layer of security and is comparatively safer because the bank verifies the identity of the person before making the payment.
Legally, Bearer Cheques can become an Order Cheque if the word "bearer" is cancelled on the cheque. Conversely, making an Order Cheque a bearer type is not a general practice due to the attached security concerns.
Bearer Cheques might be preferred for transactions where trust is established, whereas Order Cheques are used where payer wishes to restrict the payment only to the payee.
In terms of financial planning and auditing, Order Cheques are more traceable in terms of recipient, providing an additional record of payment, while Bearer Cheques do not provide a traceable record of who cashed the cheque.
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Comparison Chart
Payee Verification
Not required
Required
Security
Less secure
More secure
Transferability
Easily transferable
Not easily transferable
Alterability
Cannot be converted to order
Can be converted to bearer
Traceability of Recipient
Not traceable
Traceable
Compare with Definitions
Bearer Cheque
A cheque that is payable to whoever is in possession.
The bearer cheque was cashed immediately by John’s friend.
Order Cheque
A cheque assuring payment only to the named party.
The order cheque acted as a safety measure against potential fraud.
Bearer Cheque
A cheque that offers high liquidity with risk.
She preferred a bearer cheque for its ease of cashing.
Order Cheque
A cheque made payable to a specific individual or entity.
His salary was paid via an order cheque to ensure security.
Bearer Cheque
A cheque that can be cashed by any individual who holds it.
The bearer cheque was stolen and cashed by the thief.
Order Cheque
A secure financial instrument preventing unauthorized cashing.
Businesses prefer an order cheque to safeguard their transactions.
Bearer Cheque
A type of cheque without any specific payee.
He mistakenly sent a bearer cheque instead of an order cheque.
Order Cheque
A cheque restricting payment without verification.
The bank meticulously checked the endorsement behind the order cheque.
Bearer Cheque
Unrestrictive financial instrument that doesn’t need payee verification.
The shopkeeper hesitated to accept a bearer cheque due to its lack of security.
Order Cheque
A cheque that necessitates payee identification for encashment.
The order cheque was returned as the name and ID did not match.
Common Curiosities
Is a bearer cheque riskier than an order cheque?
Yes, bearer cheques are considered riskier due to lack of payee verification.
Can an order cheque be cashed by someone other than the payee?
No, an order cheque can only be cashed by the person/entity named on it.
Can the payee name be written on a bearer cheque?
Yes, but it's inconsequential as it’s payable to the bearer, irrespective of the name mentioned.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
