Question

What are the advantages of payment by cheque?

Answer 1

The advantages of payment by cheques are as follows:

1. Convenience: A cheque is a highly convenient way to make payment. There is no need to count and verify enormous quantities of currency notes; a single cheque can settle any amount.
2. Safety: The usage of cheque to withdraw funds from a bank account provides safety. A crossed cheque ensures that payment is only made to the payee's bank account, lowering the risk of theft or fraud.
3. Easy Transfer of Funds: Cheques facilitate making it easier to transfer money from one location to another, as well as between countries. Transferring funds by cheque is easier, safer, and less expensive than any other way.
4. Receipt: Payment by cheque also serves as a receipt. A paid cheque is valid proof of payment that can be used in disputes or for tax purposes.
5. Credit: Cheques facilitate credit transactions in the economy, hence promoting trade and commerce.
6. Money Saving: The usage of cheques saves money compared to using currency notes. The government and central bank are not required to create vast quantities of notes for routine transactions.