Archive | Cheques

Cheques in different countries in the world: Similarities and differences, local usages, Regulation, Bank offerings, Processing steps

Image of a crossed cheque

The different types of bank cheques

There are numerous types of bank cheques. The first question that may come to one’s mind is: why? why the need for many different types of bank cheques? It is simply because the regular cheque (or order cheque) does not fit in all situations as we will see below. Some types of bank cheques were […]

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Image of Four Corner Model for cheque payment

The Four Corner Model for cheque payment

After introducing the cheque (check in US english) in the previous article, the next question to explore is: how does cheque payment work? To answer this question, we will use one of the precious tools to analyze a mean of payment: the Four Corner Model. The diagram below shows the Four Corner Model for cheque […]

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Image of a cheque

Cheque: what is it?

The cheque is still quite popular in some countries in the world. According to the latest statistics of the BIS (Bank of International Settlements), the five world’s biggest users of cheques are USA, France, Canada, UK and Australia. Even though the trend shows that the cheque usage is decreasing, the volumes remain significant in those […]

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Picture of Direct and Indirect Participants to a CSM

Direct and Indirect Participants to Clearing and Settlement Systems

Banks can join a clearing system or a settlement system as direct participant (DP) or as indirect participant (IP). After reading this post, you will understand the differences between these two types of participants and why only direct participants settle in CSM. The following figure depicts direct and indirect participants and the relationship they have to […]

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Real-Time Gross Settlement System

Clearing and Settlement Mechanisms – Settlement

The Bank of International Settlement (BIS) defines settlement as an act that discharges obligations in respect of funds or securities transfers between two or more parties. Thus settlement is the funds transfer that is carried out by one party to fulfill his obligations towards the counterparty in a financial operation. Settlement must be performed after […]

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Illustration of Multilateral Clearing Mechanism

Clearing and Settlement Mechanisms – Multilateral Clearing

After presenting the bilateral clearing in the previous article, it is now time to move to the next level: the multilateral clearing. In a multilateral clearing, a high number of financial institutions are involved. But the principle is the same as for bilateral clearing. All the participant banks will exchange payments among each other up to […]

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Model of open loop payments system

Payment systems models

Traditional payment systems operate essentially on two types of models: open loop models and closed loop models. In this post, we will present each of the models with their advantages and drawbacks. Understanding how these models work is crucial for the analysis of payment systems. So read the following very carefully. Open loop models in […]

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