Traveler's cheque

Traveler's cheque
A traveler's cheque (also traveller's cheque, travellers cheque,
traveller's check or traveler's check) is a preprinted, fixed-amount
cheque designed to allow the person signing it to make an
unconditional payment to someone else as a result of having paid the
issuer for that privilege.
They were generally used by people on vacation instead of cash, as
many businesses used to accept traveler's cheques as currency.
Merchants and other parties would accept them as if they were
currency because, as long as the original signature (which the buyer is
supposed to place on the check in ink as soon he or she receives the
cheque) and the signature made at the time the check is used is the
same, the traveler's check issuer will unconditionally guarantee
payment of the face amount even if the check is fraudulently issued,
was stolen or lost. In short, a traveler's check can never 'bounce' unless
the issuer goes bankrupt and out of business. If a traveler's cheque were
lost or stolen, it could be replaced by the issuing financial institution.
Their use has been in decline since the 1990s as alternatives, such as
credit cards, debit cards, and automated teller machines became more
widely available and were easier and more convenient for travelers.
Travelers cheques are no longer widely accepted and cannot easily be
cashed, even at the banks that issue the cheques.

Terminology

A US$100 travelers cheque issued by American

Express

Obverse and reverse side of traveler's cheque of

National Bank of Poland (nomnal value: 1000
Polish zoty); sold in April 1989 in Budapest
(Hungary), for use during travel to Poland only,
never used.

Legal terms for the parties to a traveler's cheque are the obligor or
issuer, the organization that produces it; the agent, the bank or other place that sells it; the purchaser, the natural
person who buys it, and the payee, the entity to whom the purchaser writes the cheque for goods and/or services. For
purposes of clearance, the obligor is both maker and drawee.

History
Traveler's cheques were first issued on 1 January 1772 by the London Credit Exchange Company for use in ninety
European cities,[1] and in 1874, Thomas Cook was issuing 'circular notes' that operated in the manner of traveler's
cheques.
American Express was the first company to develop a large-scale traveller's cheque system in 1891,[2] and is still the
largest issuer of traveler's cheques today by volume. American Express's introduction of traveler's cheques is
traditionally attributed to employee Marcellus Flemming Berry, after company president J.C. Fargo had problems in
smaller European cities obtaining funds with a letter of credit.
Between the 1950s and the 1990s, travelers cheques became one of the main ways that people took money on
vacation for use in foreign countries without the risks associated with carrying large amounts of cash.
Several brands of travelers cheques have been marketed; the most familiar of those were Thomas Cook Group, Bank
of America and American Express.

Traveler's cheque

Declining use
The wider acceptance and better security of the alternatives such as credit and debit cards has meant a significant
decline in the use of travelers cheques since the 1990s. In addition, the security issues for retailers accepting travelers
cheques has meant that many businesses no longer accept them, making them less attractive to travelers. This has led
to complaints about the difficulty that holders have in using them. In much of Europe and Asia, the cheques are no
longer widely accepted and can not easily be cashed, even at the banks that issue the cheques.

Usage
Purchasing cheques for later use
Travelers cheques are sold by banks and financial specialist to customers for use at a later time. Upon obtaining
custody of a purchased supply of traveler's cheques, the purchaser should immediately write his or her signature once
upon each cheque, usually on the cheque's upper portion. This helps protect them if they are stolen. The purchaser
will also have received a receipt and some other documentation that should be kept in a safe place other than where
he or she carries the cheques. Traveler's cheques can usually be replaced if lost or stolen (if the owner still has the
receipt issued with the purchase of the cheques showing the serial numbers allocated).

Cashing cheques
When wanting to cash a traveler's cheque while making a purchase, the purchaser should, in the presence of the
payee, date and countersign the cheque in the indicated space, usually on the cheque's lower portion (if at a
restaurant, it may be helpful to ask the waiter to watch and wait for this to be done).

Denomination and change

Applicable change for a purchase transaction should be given in local currency as if the cheque were banknotes.
Traveler's cheques are available in several currencies such as U.S. dollars, Canadian dollars, Pounds sterling,
Japanese yen, Chinese Yuan and Euro; denominations usually being 20, 50, or 100 (x100 for Yen) of whatever
currency, and are usually sold in pads of five or ten cheques, e.g., 5 x 20 for 100. Traveler's cheques do not
expire, so unused cheques can be kept by the purchaser to spend at any time in the future. The purchaser of a supply
of traveler's cheques effectively gives an interest-free loan to the issuer, which is why it is common for banks to sell
them "commission free" to their customers. The commission, where it is charged, is usually 1-2% of the total face
value sold.

Deposit and settlement

A payee receiving a traveler's cheque should follow its normal procedures for depositing cheques into its bank
account: usually, endorsement by stamp or signature and listing of the cheque and its amount on the deposit slip. The
bank account will be credited with the amount of the cheque as with any other negotiable item submitted for
clearance.
In the United States, if the payee is equipped to process cheques electronically at point of sale (see: Check 21 Act),
he or she should still take custody of the cheque and submit it to a financial institution, particularly to avoid any
confusion on the part of the purchaser.

Traveler's cheque

Security issues
One of the main advantages travellers cheques provide is the replacement if lost or stolen.
However, this feature has also created a black market where fraudsters buy travellers cheques, sell them at 50% of
their value to other people (such as travellers) and falsely report their travellers cheque stolen with the company from
which the cheque was obtained. As such, they get back the value of the travellers cheque and make 50% of the value
as profit.[3]
The widespread problem of counterfeit travellers cheques has caused a number of businesses to no longer accept
them or to impose stringent checks when they are used. It is a reasonable security procedure for the payee to ask to
inspect the purchaser's picture ID; a driver's license or passport should suffice, and doing so would most usefully be
towards the end of comparing the purchaser's signature on the ID with those on the cheque. The best first step,
however, that can be taken by any payee who has concerns about the validity of any traveler's cheque, is to contact
the issuer directly; a negative finding by a third-party cheque verification service based on an ID check may merely
indicate that the service has no record about the purchaser (to be expected, practically by definition, of many
travelers), or at worst that he or she has been deemed incompetent to manage a personal chequing account (which
would have no bearing on the validity of a traveller's cheque).
Some purchasers have found the process of filing a claim for lost or stolen cheques is cumbersome, and have been
left without recourse after their cheques were lost or stolen.

Alternatives
The widespread acceptance of credit cards and debit cards around the world starting in the 1980s and 1990s
significantly replaced the use of travelers cheques for paying for things on vacation.
In 2005, American Express released the American Express Travelers Cheque Card, a stored-value card that serves
the same purposes as a traveler's cheque, but can be used in stores like a credit card. It discontinued the card in
October 2007. A number of other financial companies went on to issue stored-value or pre-paid debit cards
containing several currencies that could be used like credit or debit cards at shops and at ATMs, mimicking the
traveler's cheque in electronic form. One of the major examples is the Visa TravelMoney card.

References
[1] On this day - January 3 (http:/ / archive. thisislancashire. co. uk/ 2005/ 1/ 3/ 452155. html)
[2] Host With The Most (http:/ / www. time. com/ time/ magazine/ article/ 0,9171,866900-7,00. html), Time Magazine, 9 April 1956 issue
[3] Handboek voor de Wereldreiziger by Frans Timmerhuis

External links
American Express Traveler's Cheques merchant site (http://www10.americanexpress.com/sif/cda/page/
0,1641,18540,00.asp?)
Visa Travelers Cheques (http://usa.visa.com/personal/using_visa/visa_travelers_cheques.html)
Visa Interpayment Travellers Cheques (http://www.travelex.co.uk/uk/personal/TC_visamcard.aspx)
Thomas Cook Mastercard Travellers Cheques (http://www.travelex.co.uk/uk/personal/TC_visamcard.aspx)
Travelex Travellers Cheques (http://www.travelex.co.uk/uk/personal/TC_visamcard.aspx)

Article Sources and Contributors

Article Sources and Contributors

Traveler's cheque Source: http://en.wikipedia.org/w/index.php?oldid=603972712 Contributors: Ajfweb, Anastrophe, Andrewpayneaqa, Bdesham, Ben5082, Bentogoa, BuzyBody,
COMPFUNK2, CWenger, Chochopk, Cjohnzen, Cliff12345, Correogsk, Cphilp, Crocodile Punter, David.Monniaux, Decodicil, Dennis Bratland, Dspradau, Esrever, Eugene Weetman, Excirial,
Fkumbila, Gerhard51, Gerweck, Gilliam, GregAsche, Halosix, Ilike2edit, IvanLanin, Jigen III, Joshua Issac, Kgrad, Lotje, Mark Foskey, Mauls, Mochi, MrFawwaz, Myscrnnm, Nonsequiturmine,
Pinethicket, Privacy, RBBrittain, Randhirreddy, Resurgent insurgent, Rfc1394, Rmhermen, Rror, SJ Morg, Sargdub, Scott Sanchez, Speight, Spliffy, Sudosiko, TerraHikaru, Thaifriend, Thbarnes,
TinyClanger, Tiyang, Tolly4bolly, Vary, VincentPang8888, Wereon, Wikipelli, Wingman4l7, Woohookitty, Xredsox14x, , 126 anonymous edits

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File:Travelers-Cheques.jpg Source: http://en.wikipedia.org/w/index.php?title=File:Travelers-Cheques.jpg License: GNU Free Documentation License Contributors: Valentin Wittich
File:Czek.podrozniczy.1000zl.NBP.1989.jpeg Source: http://en.wikipedia.org/w/index.php?title=File:Czek.podrozniczy.1000zl.NBP.1989.jpeg License: Public Domain Contributors: kln1985

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