Why do Cheques bounce?
Cheques are not as widely used anymore as they are becoming an insecure way of payment due to their frequency to ‘bounce’. Cheques can bounce for many reasons, here are three of them;
1) A ‘Refer to Drawer’, this is where the bank refuses to pay a cheque as the account from which it is drawn does not have sufficient funds (NSF).
2) A cancellation, where the cheque has been cancelled by the owner in advance of it being paid in, often at a charge from the bank.
3) A stopped cheque, where the cheque owner has paid a charge to the bank to stop the cheque from clearing, this can be done after the cheque has been paid in, but must be done before it clears in the beneficiary’s account.