Crossed Checks

Someone wrote me a check today for something we sold off of E-Bay. Before they handed me the check, they drew two lines across it and scribbled "non-negotiable" on it.

As you can imagine, I was somewhat surprised at receiving a financial instrument that had already been marked as invalid. My in-laws had to explain it to me (with help from Google).

A "crossed check" is when the check-writer draws two lines across the check and scribbles "non-negotiable" on it. Unknown in America; ubiquitous in Australia and the UK. What it means is that the check can only be paid to another banker. In other words, you can't cash the check for cash; you can only deposit it to your bank account.

What a deal for the bankers! Not only do they get their cut for keeping your money in the first place, but they guarantee that another banker will get a cut too!

As you can imagine, I wondered what could compel millions of people to voluntarily hand someone else's banker a week's worth of free interest.

The answer is banking regulation, or rather, lack of it. If a bank pays a crossed check to the wrong party, the banker is liable. By implication, therefore, if a bank pays an uncrossed check to any random person who walks in and asks for it, then the bank is not liable.

I sort of assumed that not giving your money to random people was what you paid the bank for, but apparently, not so much. I took it for granted that banks had due responsibility to determine the identity of the individual they were handing your money too, but we're talking about banks that were started when Dickens was writing. The concept of treating consumers as entities equal to other bankers was (and apparently remains) laughable.

So, I hate the banks here. But then, I hated banks in America (so much so that I exclusively used the same Credit Union for 30 years), so I guess it's not that much of a change. Aside from people writing "No good!" on checks they're handing me, of course.