Marketing Cheque Payments in Australia - Case Study Example

Running Header: Marketing Cheque Payments Student’s Name: Instructor’s Name: Course Code: Date of Submission: Marketing Cheque Payments In Australia and many parts of the world, payment by use of the cash system was popular for a very long time. This changed when other systems were used to replace the cash system. This is when the card and cheque systems amongst others came into focus. This was around the mid 1970’s. The cheques were introduced and they worked as effectively as they could for a very long time. Currently, the cheques are dominant and preferred in the city. They are however guarded by stringent policies that ensure that they work as they ought to work. This forms the strong basis for the legal formalities that are followed when making payments by cheque. This is not only in Australia, but other parts of the world (Tyree, 1998). Some of the policies that govern the proper use of cheques in Australia include the cheques act of 1986. It spells out what should be done to ensure that all the right things are done at the right time and in the right way. One of the most important legal formalities includes the knowledge and understanding of what a cheque is. This is by understanding the commitment of drawing up a cheque. This is by highlighting of the special use of this bill of exchange that is very common all over the world. A cheque requires the involvement of four parties. The parties include the drawer, drawee, payee and the specific amount in question. Without the commitment of the four parties, it is practically impossible to draw a successful cheque. A cheque is made by person who has the sole intent of making payment to another person. This is the person that is known as the drawer. He sends this cheque to a payee who has the sole duty of receiving the cheque and cashing it. The institution that has been presented with the cheque for the payment is known as the drawee. The drawee has the responsibility of identifying whether the account linked to the cheque has enough funds. The funds are then remitted to the person who presented the cheque (Tyree, 2000). There are very many types of cheques. Their mode of operation is the same and it cuts across all the cheques. The person with the cheque book is the one that draws the cheque. Once this is done, it is remitted to the payee. The payee has a responsibility of representing it to the bank for payment. Once the drawer receives the cheque, it is his duty to communicate with the payee. This is done electronically to ensure that money is transferred from one account to the next. This can only happen if the drawer has enough money to pay the payee. In the event that there are insufficient funds in the account, the cheque will bounce. This means that the payee cannot receive any form of payment from the cheque. It is a legal requirement for the drawer to ensure that he or she has adequate funds in his or her account (Weerasooria, 2000). It is also a legal requirement for all the parties involved to clearly indicate their details. This will ensure that their names, date and account numbers are clearly visible in the cheque. This will ensure that it is possible to carry out the transaction to its ultimate conclusion. The system of clearing cheques electronically is as a result of the electronic clearance system. This was started in 1990 after manual clearance was replaced. In Australia, the use of BSB codes is used in many instances. They have the duty of identifying the specific bank and account that is to be debited. This ensures that the transaction is fool proof and that no one can fool the cheque and debit system that the bank uses. As much as there are measures that are in place to ensure security of the system, many issues come into focus. One of the most common problems that occurs is when using the cheques includes the issue of bouncing cheques. Bouncing cheques can be identified as those drawn to a specific account with the prior knowledge by the drawer that the account does not have funds. It could lack funds or they could be insufficient. This would mean that the money would not have the ability to come forth and clear the cheque that has been presented for clearance and ultimately payment. There are very many people who thrive on the flat period of cheques. This is the time that they use to carry out fraudulent activities that are not represented by legal requirements of the use of cheques as a form of payments (Garner, 1995). There are new ways that are used in counterfeiting very many materials. The counterfeiting of cheques has become a very common issue. This is not in Australia alone. The world has reported very many methods that are used in the counterfeiting of cheques. This can be done by any interested party that is interested in making a kill through illegal means. There are situations where the forger has the ability to draw up cheques and sign them. The forger then takes them for cashing at any bank or financial institution of his or her choice. If the signature has been forged as authentically as it may appear originally, money can be debited into an account. This account does not have the legal right to receive the money. The owner of the account does not have the knowledge that his or her account has dispensed some amount of money into another person’s account. This creates a scenario where the forger has benefitted from a source that he or she did not have jurisdiction too. This is a crime punishable by law in any state (Tyree, 2000). In many cases, there are people who have lost their cheque books. This creates very many problems for them. This is because just like any other valuable items, cheque books are stolen and used to solicit funds from ones account. This is the case when the thief has the ability to authenticate the signature that will be cleared by the bank. Apart from being stolen, it is possible for the cheque to be overwritten. This means that it is possible for the cheque to have its contents changed once it has been written. This is especially the case when there is room to do so on the cheque. This means that there is a probability of the successful gain of extra sums of money that a cheque did not originally authenticate. Despite all the issues that may arise out of the cheque payment system, there are solutions for the problems experienced. Some of the solutions occur as basic and precautionary measures. Remedies The most basic thing to be done to avoid issues with the cheque is to verify the information. It is essential to provide all the details that are required by the banks. This is with respect to being either the drawer or the payee. Many at times, the issue of date, misspelt names and bank accounts have denied one access to money that he or she deserves. As the drawer, specify the correct amount, the date and the payee’s name. This will create a scenario where the cheque will have the ability to be successfully cashed. The details should be verified by the payee before he or she presents it for payment. This is the only solution to the basic cheque issues that arise from incorrect data presentation (Tyree, 2000). For many years, the systems of drawing two diagonal lines across a cheque have been used for a very long time. The space is used with the aim of ensuring that the drawer can also include the payee’s name. This means that in many cases, it will be impossible for any form of fraud to occur at this stage. Once the drawer has included the name of the person cashing the cheque, there are very limited chances that the information can be taken and used elsewhere (Garner, 1995). It is also difficult for the cheque to be altered at both sections. This precautionary measure ensures that the drawer of cheque is protected from any data issues that may arise. It is also a form of authentication procedure that is used in the verification of the person cashing the cheque. The issue of theft is very hard to remedy. This is because theft is something that is rarely bargained for. This means that theft occurs and there is no time that any individual has the ability to know that he or has will be stolen from. The remedy to theft should be reported to the bank immediately. If one has drawn up a cheque and it is stolen, it is important to notify the bank. It is also important to ensure that the safety of the cheque book is guaranteed. In the event that it also gets lost, the bank should be notified. This will ensure that the cheque book is not used in unauthorised deals and negotiations (Tyree, 1998). In conclusion, the legal formalities that surround the payment by cheque are aimed at ensuring the legitimacy of the issue at hand. They protect the drawer from all the unscrupulous people that might have an aim out there. This is in reference to making profits or withdrawing money that they do not deserve to assess. The punishments that come with forgeries and presentation of bouncing cheques are very necessary (Weerasooria, 2000). This is because it deters many people from mocking the bank laws and their system. This is because there are so many people out there who draw up cheques with the knowledge that they do not have funds or they are insufficient. The bank goes through its systems during the entire process of clearing. This cost a lot of time and effort. As much as there are other modes of payments, there are people who will make use of the cheque system of payment for a very long time. The cheque system of payment does not always have to be disadvantageous. There are some solutions to the problems that people experience when making use of the cheque system of payment. In the case of cheques getting lost or stolen, banks can ensure that only a person who has been identified as the person named on the cheque should be given the cash. Banks should ensure that they do not allow anyone to collect the cash contained in a cheque if it is not the person named in the cheque. Another possible solution is the abolishment of open cheques which can be cashed by just anybody. These have made a lot of people to lose their money in case their cheques land in the wrong hands (Tyree, 2000). References Garner, B. A. (1995). A dictionary of modern legal usage (2nd ed.). Oxford: Oxford University Press. Tyree, A. L. (1998). Banking Law in Australia. Butterworth’s: Sydney. Tyree, A. L., & Beatty, A. (2000). The Law of Payment Systems. Butterworth’s: Sydney. Weerasooria, W. S. (2000). Banking Law and the Financial System in Australia. Butterworth’s: Sydney. Read More