Cash vs. Cheques — What's the Difference?
By Tayyaba Rehman & Fiza Rafique — Updated on April 28, 2024
Cash involves physical currency for transactions, providing immediate payment, while cheques are written orders to banks to pay a specified sum, often requiring processing time.
Difference Between Cash and Cheques
Table of Contents
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Key Differences
Cash refers to physical money, including coins and banknotes, used directly in transactions. It provides immediacy and certainty of payment as it requires no processing time. Conversely, cheques are financial instruments issued by an individual or organization to a bank, directing it to pay the specified amount from the issuer's account to the person or entity named on the cheque.
While cash is universally accepted and requires no verification of the payer's account balance at the point of transaction, cheques need to be cleared and processed by banks, which involves verifying that the issuer has sufficient funds. This can result in a delay before the funds are available to the payee.
In terms of security, cash carries the risk of loss or theft without a trace, whereas cheques can be stopped, traced, and if necessary, canceled, offering a higher level of security for larger transactions. However, cheques also face the risk of being returned for insufficient funds, known as "bouncing."
Cash transactions are typically preferred for small, everyday purchases due to their simplicity and immediacy. Cheques, however, are often used for larger amounts where carrying cash might be impractical or unsafe, such as paying rent or large bills.
Cash usage is in decline in many parts of the world due to the convenience of digital payments, which offer similar immediacy and less physical burden. Cheques also see declining usage but remain in areas and among demographics less comfortable with digital transactions or where a paper trail is necessary for financial management or legal reasons.
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Comparison Chart
Form
Physical currency (coins, banknotes)
Paper document
Payment Speed
Immediate
Requires processing (days)
Security
Risk of theft, no recovery
Can be canceled, traceable
Common Uses
Small, everyday purchases
Large transactions, bill payments
Accessibility
Universal acceptance
Requires bank account
Compare with Definitions
Cash
Legal tender in the form of coins and banknotes.
He paid in cash to avoid credit card fees.
Cheques
Requires bank processing to transfer funds.
The deposit cheque will clear in three business days.
Cash
Money in hand, as opposed to credit.
Buying with cash can often secure a discount.
Cheques
A written order to a bank to pay a specified sum.
He wrote a cheque for the first month's rent.
Cash
Physical currency used in direct trading.
Vendors at the fair only accept cash.
Cheques
Used for transactions where immediate cash is impractical.
They paid the contractor by cheque.
Cash
Readily available money.
She always keeps cash on hand for emergencies.
Cheques
Subject to clearance times and possible bouncing.
His rent cheque bounced due to insufficient funds.
Cash
Immediate form of payment.
Cash transactions are preferred at the local farmer's market.
Cheques
Security features include signatures and account numbers.
She signed the cheque at the bottom right.
Cash
In economics, cash ( (listen) kash, or kaysh in AuE) is money in the physical form of currency, such as banknotes and coins. In bookkeeping and financial accounting, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately (as in the case of money market accounts).
Cheques
Variant of check.
Cash
Money in the form of bills or coins; currency.
Cheques
Plural of cheque
Cash
Liquid assets including bank deposits and marketable securities.
Cash
Money paid in currency or by check
Paid in cash.
Cash
Any of various Asian coins of small denomination, especially a copper and lead coin with a square hole in its center.
Cash
To exchange for or convert into ready money
Cash a check.
Cash in one's gambling chips.
Cash
(uncountable) Money in the form of notes/bills and coins, as opposed to cheques/checks or electronic transactions.
After you bounced those checks last time, they want to be paid in cash.
Cash
Liquid assets, money that can be traded quickly, as distinct from assets that are invested and cannot be easily exchanged.
Cash
Money.
Cash
Cash register, or the counter in a business where the cash register is located.
Let me just bring these to the cash for you.
Cash
An instance of winning a cash prize.
Cash
A place where money is kept, or where it is deposited and paid out; a money box.
Cash
Any of several low-denomination coins of India, China, or Vietnam, especially the Chinese copper coin.
Cash
(transitive) To exchange (a check/cheque) for money in the form of notes/bills.
Cash
(poker slang) To obtain a payout from a tournament.
Cash
To disband. To do away with, kill
Cash
(slang) Great; excellent; cool.
Cash
A place where money is kept, or where it is deposited and paid out; a money box.
This bank is properly a general cash, where every man lodges his money.
£20,000 are known to be in her cash.
Cash
Ready money; especially, coin or specie; but also applied to bank notes, drafts, bonds, or any paper easily convertible into money
Cash
To pay, or to receive, cash for; to exchange for money; as, cash a note or an order.
Cash
To disband.
Cash
A Chinese coin.
Cash
Money in the form of bills or coins
Cash
Prompt payment for goods or services in currency or by check
Cash
Exchange for cash;
I cashed the check as soon as it arrived in the mail
Common Curiosities
Are there fees associated with cash or cheque transactions?
While cash transactions generally do not incur fees, cheques may come with processing fees, especially for stopped or bounced cheques.
What are the advantages of using cash over cheques?
Cash offers immediate payment without the need for bank processing and is universally accepted.
How are cash and cheques treated differently for accounting purposes?
For accounting, cash transactions impact financial records immediately, while cheques are recorded once they are processed and cleared.
Why might someone choose to use a cheque instead of cash?
Cheques provide a safer way to carry and transfer large amounts of money and offer traceability and cancellation options.
How secure is using cash compared to cheques?
Cash carries a higher risk of theft and cannot be traced or recovered easily, whereas cheques can be stopped, traced, and do not require carrying large sums physically.
What happens if a cheque bounces?
If a cheque bounces, the intended recipient does not receive the money, and the issuer may face bank fees and legal issues for non-sufficient funds.
Can cash or cheques be used for online purchases?
Online purchases typically cannot be made with cash directly and rarely with cheques; digital payments or credit/debit cards are usually required.
How do businesses manage large cash and cheque transactions securely?
Businesses use secure transport for large cash amounts and employ stringent procedures for accepting and processing cheques to ensure security and validity.
How long does it typically take for a cheque to clear?
It typically takes 2-5 business days for a cheque to clear, depending on the bank and the countries involved.
What precautions should be taken when carrying cash or cheques?
For cash, it's important to minimize the amount carried and secure it discreetly. For cheques, proper endorsement and immediate deposit or cashing are advisable to minimize the risk of theft or loss.
Why is cash still popular despite the rise of digital payments?
Cash remains popular due to its simplicity, universal acceptance, and the lack of a need for technological infrastructure.
Can cheques be personalized for extra security?
Yes, cheques can include security features like watermarks, microprinting, and personalized designs to prevent fraud.
What role do banks play in processing cheque transactions?
Banks verify the validity of cheques, ensure the payer has sufficient funds, process payments, and handle any issues like cheque bouncing.
Is it possible to cancel a cash transaction?
Once cash is handed over, the transaction cannot be canceled or reversed, unlike cheques, which can be stopped if not yet processed.
Are there environmental considerations with using cash or cheques?
Producing cash and cheques has environmental impacts due to the resources needed for their manufacture, leading some to prefer digital transactions for environmental reasons.
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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.
Co-written by
Fiza RafiqueFiza Rafique is a skilled content writer at AskDifference.com, where she meticulously refines and enhances written pieces. Drawing from her vast editorial expertise, Fiza ensures clarity, accuracy, and precision in every article. Passionate about language, she continually seeks to elevate the quality of content for readers worldwide.
