A cheque or check is a negotiable instrument instructing a financial institution to pay a specific amount of a specific currency from a specified demand account held in the maker/depositor's name with that institution. Both the maker and payee may be natural persons or legal entities.

Etymology and spelling

The most common spellings of the word (in all its senses) were check, checque, and cheque from the 1600s until the 1900s. Since the 1800s, the spelling cheque (from the French word chèque) is standard for the financial sense of the word in the UK, Ireland, and the Commonwealth, while only check is retained in its other senses, thus distinguishing the two definitions in writing. The English word cheque comes from the Arabic ṣakk (صكّ), itself the Arabicized of 'chak' in Persian, which is a written document or letter or note of credit Muslim merchants adopted to carry out their trading. The concept of ṣakk appeared in European documents around 1220, mostly in areas neighbouring Muslim Spain and North Africa; south France and Italy.

On the other hand, check is used for the financial sense in the U.S.

History

The cheque had its origins in the ancient banking system, in which bankers would issue orders at the request of their customers, to pay money to identified payees. Such an order was referred to as a bill of exchange. The use of bills of exchange facilitated trade by eliminating the need for merchants to carry large quantities of currency (e.g. gold) to purchase goods and services. A draft is a bill of exchange which is not payable on demand of the payee. (However, draft in the U.S. Uniform Commercial Code today means any bill of exchange, whether payable on demand or at a later date; if payable on demand it is a "demand draft", or if drawn on a financial institution, a cheque.)

The ancient Romans are believed to have used an early form of cheque known as praescriptiones in the first century BC. During the 3rd century AD, banks in Persia and other territories in the Persian Empire under the Sassanid Empire issued letters of credit known as Ṣakks.

Muslims are known to have used the cheque or ṣakk system since the times of Harun al-Rashid (9th century). In the 9th century, a Muslim businessman could cash an early form of the cheque in China drawn on sources in Baghdad,Paul Vallely, 1 How Islamic Inventors Changed the World], The Independent, 11 March 2006. a tradition that was significantly strengthened in the 13th and 14th centuries, during the Mongol Empire. Indeed, fragments found in the Cairo Geniza indicate that in the 12th century cheques remarkably similar to our own were in use, only smaller to save costs on the paper. They contain a sum to be paid and then the order "May so and so pay the bearer such and such an amount". The date and name of the issuer are also apparent.