The travel check is a medium of exchange that can be used in place of hard currency. They can be denominated in one of the world's major currencies and printed, a number of fixed checks designed to enable the signatories to make unconditional payments to others as a result of paying the publisher for that privilege.
They are generally used by people on holiday abroad, not cash, because many businesses are used to receive travelers checks as currency. The incentive for merchants and others to accept them lies in the fact that as long as the original signature (which buyers have to place on ink coming as soon as they receive the check) and the signature made at the time the check used is the same, the check issuer will guarantee payment of unconditional face counts even if the check was issued fraudulently, stolen, or lost. This means that traveler's checks can not 'bounce' unless the issuer goes bankrupt and goes out of business. If a travel check is lost or stolen, it can be replaced by a issuing financial institution.
Financial institutions that issue travel checks earn income in various ways. First, they will charge the sale of such checks. In addition, they can earn interest for the period when the checks are not cashed, while not paying any interest to check holders, making them an interest-free loan effective. Also, foreign exchange rates commonly used in travelers' checks (generally based on rates applicable at the time of purchase) are less favorable than other forms of earning foreign currency, especially on credit card transactions (using rates applicable to those statements). date). On the other hand, the fees set and the cost of issuing and processing traveler's checks are much higher than for credit card or travel money card transactions. The check issuer carries the exchange rate risk, and usually pays a fee for hedging against risks.
Its use has declined since the 1990s, when more convenient alternatives, such as credit cards, debit cards, and automated teller machines, are becoming more available and easier to use by travelers. Travel checks are no longer widely accepted and can not easily be cashed, even in the issuing bank. Alternatives to traveler's checks are generally cheaper and more flexible. The travel money card offers similar features for travelers checks, including purchase of foreign currency at prices applicable on the date of purchase, but offers greater ease and flexibility, such as use like a regular credit card, no need for local currency changes, in addition to features others.
Video Traveler's cheque
Terminology
By law, the parties who conduct travel check transactions are as follows. Organizations that generate travel checks are obligor or publisher . The bank or other place selling it is agent of the publisher. The natural person who purchased the check is a buyer . The entity to which the buyer submits payment for payment of goods or services is a payee or merchant . For clearance purposes, the obligor is the manufacturer of and drawee .
Maps Traveler's cheque
History
The travel check was first issued on January 1, 1772 by the London Credit Exchange Company for use in 90 European cities, and in 1874 Thomas Cook issued a "circular note" operated by travelers checks.
American Express developed a large-scale international tourist check system in 1891, to replace traditional credit letters. It is still the largest publisher of today's travel checks by volume. The introduction of traveler's checks by American Express has traditionally been associated with Marcellus Flemming Berry employees, after the president of the company J.C. Fargo has problems in smaller European cities earning funds with letters of credit.
Between the 1950s and 1990s, traveler's checks became one of the main ways people take money for holidays to use abroad without the risks associated with carrying large amounts of cash.
Some brands of travelers checks have been marketed; The most familiar are Thomas Cook Group, Bank of America, and American Express.
Decrease usage
The wider convenience and acceptance of alternatives such as credit and debit cards and wider ATM availability have led to a significant reduction in the use of traveler's checks since the 1990s. In addition, retailer security concerns have caused many businesses to stop accepting them, in turn making them less attractive to travelers. This has caused complaints about the difficulties the holder has in using it. In most Europe and Asia, travelers' checks are no longer widely accepted and can not easily be cashed in, even in the issuing bank.
Because travel checks do not earn interest, one of the major incentives financial institutions have to sell travelers checks is that they effectively represent a loan without interest from the buyer to the seller. The sustained decline in interest rates in most developed countries from the early to mid 1990s has substantially reduced the profitability of travel checks for their issuers. Financial institutions have responded to this development by charging new fees for travelers checks, increasing their costs, or by getting out of business altogether.
Usage
Buy a check for later use
Travel checks are sold by banks and agents to customers for later use. After obtaining the inventory rights of the travel check purchased, the buyer will immediately sign each check. The buyer will also receive a receipt and some other documentation that should be kept in a safe place other than where they brought the check. Trip checks can usually be replaced if lost or stolen, assuming the owner still has a receipt issued with the purchase of a check indicating the serial number allocated.
Disbursement check
To cash a traveler's check to make a purchase, the buyer will, in the presence of the payee, date and re-sign the check in the space indicated.
Denomination and change
Tourist checks are available in several currencies such as the US dollar, Canadian dollar, Pound sterling, Japanese yen, Chinese Yuan, and Euro; denominations typically be 20, 50, or 100 (x100 for Yen) of any currency, and are usually sold in bearing five or ten checks, for example, 5 ÃÆ'â € "EUR20 for EUR100. Travel checks are not expired, so unused checks may be kept by the buyer for future spend anytime. Buyer supplies travel checks effectively provide interest-free loans to the issuer, which is why it is common for banks to sell them "commission-free" to their customers. Commission, where it is charged, usually 1-2% of the total nominal value sold.
Any changes to purchase transactions will be given in local currency.
Deposit and deposit
A payee receiving a traveler's check will follow a normal procedure for keeping a check in his bank account: typically, endorsement with a stamp or signature and a check and the amount in the deposit slip. The bank account will be credited with the check amount as any other negotiated item sent for permission.
In the United States, if the payee is equipped to process the check electronically at the point of sale ( see: Check 21 Act), they will still take the check and submit it to the financial institution, in particular to avoid confusion on the buyer.
Security issues
One of the main advantages of travel checks is replacement if lost or stolen.
However, this feature has also created a black market where fraudsters buy traveler's checks, sell it for 50% of its value to others (like travelers) and misreport their stolen trip checks with the company where the check was obtained. Thus, they get back the value of traveler's checks and make 50% of the value as a profit.
The widespread problem of fake travel checks has resulted in some businesses no longer accepting them or forcing strict security when they are used. It is a reasonable security procedure for the payee to request to check the buyer's image ID; SIM or passport should be enough, and this is most useful at the end of comparing buyer signatures on IDs with those in check. The best first step, however, that the payee may take with concerns about the validity of checks for each trip, is to contact the publisher directly; negative findings by third-party check verification services based on an ID check may only indicate that the service has no record of buyers (as expected, practically by definition, of many travelers), or at worst that they have been deemed incompetent to administer a private checking account (which has nothing to do with the validity of travelers checks).
Some buyers have found the claim filing process for lost or stolen checks impractical, and left unsecured after their checks are lost or stolen.
Alternative
The wide acceptance of credit cards and debit cards worldwide beginning in the 1980s and 1990s significantly replaced the use of traveler's checks to pay for vacationing things.
In 2005, American Express released the American Express Travelers Check Card , a stored value card that serves the same purpose as travelers checks, but can be used in stores such as credit cards. This card was discontinued in October 2007. A number of other financial companies went on to issue a debit card of pre-paid or debit cards containing some usable currency such as credit or debit cards in stores and at ATMs, mimicking travel checks in the form electronic. One of the main examples is the TravelMoney Visa card.
See also
- Check the cashier
- Certified checks
- Eurocheque
- Money order
References
External links
- American Express Travelers ChequesÃ, - merchant site
- Visitor Checker Visitor Interface
Source of the article : Wikipedia
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