Checking clearing (or check clearing in American English) or bank permission is the process of moving checks from the bank where the card is deposited to the bank it withdraws, and the movement of money in the opposite direction. This process is called the clearing cycle and usually generates credit to an account in a deposit bank, and the same debit to the account in the bank it withdraws. If there is not enough funds in the account when a check arrives at the issuing bank, the check will be returned as an honorable check marked as insufficient funds.
Video Cheque clearing
Operasi
Imagine a city with ten banks. Customer every bank deposit check every day, which can be taken on one of ten banks. The bank will credit the depositors account with the total number of saved checks. For a check taken on a customer from the same bank, the bank will debit the account of the drawer. But a check taken on another bank (called "issuing bank") must be "presented" to each bank before the depositors bank receives payment to cover the amount credited to the depositors' account.
All ten banks may have scribes to pick up checks drawn in other banks to those banks, and wait for payment. A clearing house is formed to streamline the process by collecting all checks taken at another bank, and collecting payments from other banks for the amount to be removed.
Maps Cheque clearing
History
English
Checks began to be used in the UK in the 1600s. The person receiving the check ("drawee") may go to the bank of drawers ("issuing bank") and submit a check for payment. Before payment, the bank of drawers will check that the check is in order - for example, that the signature is that of the drawer, that the date is valid, that the check is set up correctly, etc. Alternatively, an attractive person may deposit a check with their own bank that will arrange it to be presented to the issuing bank for payment.
Until about 1770, unofficial check exchanges took place among London banks. The clerk of each bank visits all other banks to exchange checks, while keeping a balance count among them until they are satisfied with each other. Daily check cleaning begins around 1770 when bank employees meet at Five Bells, a tavern on Lombard Street in the City of London, to exchange their checks in one place and settle the balance in cash. The first organization for check clearing was "Bankers Clearing House," established in London in the early 19th century. The company was founded by Lubbock's Bank on Lombard Street in a single room where London bank employees meet daily to exchange checks and settle accounts. In 1832 Charles Babbage, who was a cofounder of Clearing House, published a book on mass production, Mechanical Economics and Manufacturing, where Babbage describes how the Clearing House operates:
- "In a large room on Lombard Street, about 30 clerks from several London bankers took their stations, in alphabetical order, on tables placed around the room, each with a small open box by its side, and a name the company that belongs to him in large letters on the wall above his head, from time to time another clerk from every house [banking] enters the room, and proceeds, drops it onto the check box that the company must pay to the house from which the distributor is sent.
Starting at 5 pm, an employee for each bank of the debtor is called to go to the pulpit to pay cash to the Inspector of Building Clearing the number of banks they owe to other banks that day. After all the debitor's clerks pay the Inspector, every bank officer owing money goes to the pulpit to collect the money owed to their bank. The total cash paid by the debtor bank matches the total cash collected by the creditor bank. On rare occasions when the total paid is not the same as the amount collected, another employee working for the Inspector will check the paper trail of the document so that numerical errors can be found and corrected.
Skipping ahead of several centuries, Check and Credit Clearing Company is an English clearing house.
United States
The Suffolk Bank opened its first clearing house in 1818 in Boston, and one was founded in New York in 1850. A clearing house for bankers opened in Philadelphia in 1858.
The Americans improved in the British check clearing system and opened the clearing house of the banker, the Clearing House Association, at the Bank of New York on Wall Street, New York in 1853. Instead of a slow London procedure in which every bank officer, one at a time, to the Inspector's pulpit, in a New York procedure, two bank employees from each bank work simultaneously. An officer from every bank sat inside a 70-foot long table while the second officer from each bank stood outside the table facing another clerk from the same bank. Each of the court clerks carried a file box. When the manager gestures, all the outside clerks go one position to the left, to face the next sitting clerk. If a scribe sits on behalf of a bank to which the money owes or where it is received, the net amount of cash will change hands, together with checks and paper documents.
Thus some such transactions can be performed simultaneously, throughout the oval table. When the manager beckons again, the procedure is repeated, so after about six minutes, the clerks have completed all the assigned transactions and returned to their original location, and held exactly the amount of cash written in their newspaper. Clerks are fined if they make a mistake and the amount of fines increases quickly as time passes.
The Federal Reserve System check clearing system was established in the United States in 1913 to act as a large, capitalized clearing house. The goal is to prevent the occasional panic, in which the bank will refuse to accept the withdrawn check on the bank whose solvency is uncertain. The Federal Reserve can physically receive and send checks.
Automation
Check the processing
As volume grows, more efficient sorting methods are developed. Near the 1940s, two popular methods were Sort-A-Matic and Top Tab Key. Sort-A-Matic involves a set of metal separators or leathers numbered 00 to 99, operated to implement the form of radix sort: checks will be sorted by hand according to the first two digits. Checks are cleared, and each stack is sorted into the same divisor by the third and fourth digits. This process is repeated until the finished check is sorted. The Top Lock tab uses a physical mechanism: holes are hollowed at the top of each check representing the value of various digits, and the metal key used to physically move them until sorted.
Magnetic ink character recognition (MICR) was developed and commercialized in the 1950s, and enabled computers to reliably read routing and account numbers and automate paper checks.
Electronic permissions
Check cuts were introduced in various countries, beginning in the 1990s, to allow electronic images created from physical inspection, for electronic clearance.
This change allows for businesses and consumers to deposit checks without sending them to their own bank. In a procedure known as a long-distance deposit, a depositor will create a physical check image with a smartphone or other device, and attach an image to the deposit. The depository bank will use a check image in the normal electronic permit process, although in this case MICR data is not available.
Electronic payment
As audit processing automation increases, the electronic payment system completely obviates the need for paper. Two methods were developed: Automated Clearing House (ACH) for smaller payments completed within two business days, and Inter-Bank Clearing Payment System (CHIPS) for same day payments with greater value.
- "In 1974, the ACH Association of California, Georgia, New England, and the Upper Midwest region formed NACHA in the American Bankers Association, after which the initial ACH rules were approved, which made Pre-order or Direct Payments and Deposits Deposit, first type ACH transaction, effective In 1978, it is possible for two financial institutions located anywhere in the US to redeem the ACH payments under a common set of rules and procedures. "
- "The automated clearinghouse system (ACH) is a national network through which storage agencies send each other a collection of electronic credit and debit transfers.The direct salaries, social security allowances, and tax returns are typical examples of ACH credit transfers Direct debit of mortgages and utility bills are typical examples of ACH debit transfers. While ACH networks were originally used to process repeated payments, the network is currently used extensively to process single transfer debits, such as check payments and payments made by phone and the internet. "
"CHIPS is the world's largest dollar-dollar private sector transfer system, cleans and completes an average of $ 1.5 trillion in cross-country and domestic payments every day.This combines the best of two types of payment systems: the efficiency of net system liquidity and the intraday finality of the RTGS. "Regulated in 1970 by eight New York banks belonging to the Federal Reserve system, CHIPS competes with the Federal Reserve for high-value payments. Until 2001, CHIPS settled at the end of the day, but now provides intraday payment payments through real-time systems.
See also
- CHAPS - the equivalent of CHIPS in the UK
- Electronic funds transfer (EFT)
- Direct Deposit
- Electronic Review Board (ECC)
- Fedwire
- Electronic Benefit Transfer
- Electronic payments
- NACHA - national ACH network
- Check Out Substitute
References
Source of the article : Wikipedia
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