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      • The main disadvantages of a cheque system are as follows: A cheque may not be accepted if the drawer is not regarded as fully credit worthy. A cheque may be tampered. For black money transaction, cheque is useless. The bank in some cases may not be willing to honour a cheque. Writing the cheque may be careless.,a%20cheque.%20Writing%20the%20cheque%20may%20be%20careless.
  1. People also ask

    What are the benefits of cheque truncation?

    What is cheque truncation system?

    What are the advantages of making payments by cheque?

    What are the disadvantages of checks?

  2. Advantages and Disadvantages of cheques - Free ZIMSEC ...

    Disadvantages of cheques. Cheques are not legal tender and other creditors may refuse to accept them. They may be valueless if the drawer has no funds in his/her account. Depositing cheques into an account is time consuming. Cheques are not suitable for small amounts. People without bank accounts will be inconvenienced by crossed cheques.

  3. What are the disadvantages of the cheque system?

    The main disadvantages of a cheque system are as follows: A cheque may not be accepted if the drawer is not regarded as fully credit worthy. A cheque may be tampered. For black money transaction, cheque is useless. The bank in some cases may not be willing to honour a cheque. Writing the cheque may be careless.

  4. Advantages and Disadvantages of Cheque

    Constant use of cheque in an economy can reduce black money in the system. Please read more on Black Market here. For now, consider black money to be money earned through illegal activity. Disdvantages of using Cheques for payment. A cheque is not a legal tender. As a result, creditors may choose not to accept them.

  5. The Disadvantages of Using Check Payments | Sapling

    Mar 28, 2017 · Other Disadvantages Unlike debit cards, which need only a four-digit PIN, checks require a signature. If you are injured or rushed when signing a check, it can be returned because the signature doesn't match the one on file.

  6. What are disadvantages of cheque truncation? - Quora

    Aug 30, 2019 · That means, the cost of implementing such a system becomes costly. Declining Clearing House Payment Mechanism: Cheque volumes are said to be decreasing at a slow but steady rate, thanks to innovations in technology. Banks are therefore skeptical to invest too much of money in this regard.

  7. Be Aware of These Disadvantages of Electronic Payment Systems ...
    • Password Threats
    • Limitations on Amount and Time
    • Risk of Being Hacked
    • False Identity
    • Anonymity and Privacy Concerns
    • Additional Cost and Effort
    • Loss of Smart Cards

    In case of e-banking or online financial transactions, you need to be a registered user with the respective website. Though most transactions involve the use of one-time passwords thus ensuring safety to a considerable extent, some parts of a transaction, or your personal details and bank account information is accessible through your credentials for the online portal. This gives rise to the need of password protection when handling financial accounts online. Also, if you are transacting with multiple financial institutions or have accounts with multiple banks, the risk of privacy breach is multiplied. For some, maintaining multiple accounts online feels tedious.

    For withdrawal or fund transfer, certain banks may impose limits on the amount or the number of daily transactions, whereby an amount exceeding a certain figure cannot be withdrawn at once, or only a certain number of transactions are allowed per day. While this is taken as a safety measure, some may find it inconvenient. The access to money may be delayed in case of electronic modes as against having physical access to money. In case of taking electronic payments, the payment terms may need to be longer. When different electronic payment services do not cooperate with one another, e-currency exchange services may need to be opted for.

    When transacting online, your personal or account information and credit card number is exposed over the Internet. This leads to the risk of your account being hacked. Hackers may use your identity for fraudulent activities or make huge fund transfers from your account, which could mean financial losses for you.

    There are no means to verify if the person entering information online is the same person he claims to be. This is because unlike physical transactions, the individual is not present in person, and one’s identity is not verified using a photograph or a physical signature. Mostly, electronic cash transactions are based on cryptographic systems. Information being transferred is encoded by means of numeric keys when the transaction details travel across the web. Though electronic payments carry less risk of forgery, the keys are vulnerable to attack.

    All the transaction and user details are recorded by the payment systems you are using, and stored in their database. This leads to lack of anonymity. Cases of identity theft have raised privacy concerns in electronic payments. If credit card details are not sent over a secure server, if online transactions are not carried out over a secure Internet connection, if virus protection software or firewalls are not in place, or if data encryption techniques are not used, there is a serious risk of privacy breach. In the absence of proper security measures, sensitive information may be exposed to hackers, leading to illegitimate use of your identity or money.

    Some electronic transaction services may require you to pay processing fees and the like, thus leading to increased costs. Some systems require setup fees, while some others enforce a certain number of transactions every month. Electronic payment systems need Internet access, which may invite additional costs. Setting up the account, accessing the Internet, familiarizing oneself with the interface and operating it efficiently, involves additional effort, and may be cumbersome for some.

    Electronic payments involve the use of smart cards (credit and debit cards, ATM cards, identity cards, etc.) And this involves the risk of their theft or loss. In case a lost smart card falls in the wrong hands or if it is stolen, your identity is at the risk of theft and the money in the account that the card is linked to, may be spent by fraudulent users. There are measures to inform the bank about the loss of your card and get it blocked. But the time between losing the card and blocking it, is critical. Unauthorized users may carry out transactions in your name during that period. This was an overview of the disadvantages of electronic payment systems. While their advantages outweigh the risks involved in their use, we should be aware of these potential threats and take the safety measures needed. Like it? Share it!

  8. Advantages and Disadvantages of Different Payment Types

    Sep 26, 2016 · Disadvantages of Cash: Money in the drawer can be tempting for some employees to steal A safe needs to be on site or frequent trips to the bank for deposits must be made, which takes time and money. Money at your location increases your risk for theft not just from employees but criminals as well.

  9. What is Cheque Truncation System (CTS)? Definition, Modes ...
    • Parties Involved
    • Customer Service
    • Operational Benefit
    • Commercial Benefit
    • Provides Fraud Prevention Mechanism

    To understand how the CTS functions, we must know about the parties involved in it. There are majorly following three parties involved in the cheque truncation system: 1. Presenting Bank: The bank which represents the payee in the whole CTS process is known as the presenting bank. Usually, the presenting bank is that bank where the payee holds an account. We can also say that often the service bank represents the payee in the CTS. 2. Drawee Bank: The drawee is the person who is liable to pay, so the drawee bank is that bank which represents the payer and is liable to pay on his/her behalf. 3. Clearing House: The Clearing House acts as a link between the above two parties, i.e., the presenting and drawee banks to ensure effortless negotiation of cheque transactions.

    Customers are the lifeline of any business. Therefore, in the banking industry, also it is essential to enhance their experience. In this context, CTS serves the following purposes: 1. Extends Cut-off Time: The CTS provides a longer cut-off time for the customers to deposit their cheques in their banks. 2. Minimizes Timelines for Clearance: Due to CTS, the time taken for cheque clearance have reduced tremendously. Now, the payment of cheques is possible within 24 hours. 3. Easily Recovers Information: Since the data is stored in the electronic form, it can be conveniently retrieved whenever required.

    With technological advancement, every industry is becoming quicker; thus CTS too eases out the banking process of cheque processing and payment in the following ways: 1. No Requirement of MICR Amount Encoding: The banks are not required to encode the cheque amount in the MICR in CTS, thus saving time and efforts. 2. No Reconciliation Difference: The CTS enables prompt and simultaneous processing of the cheques by letting the MICR and image data which removes the reconciliation difference. 3. Eliminates Loss, Tampering or Pilfering of Cheques: When the cheque is transmitted in electronic form instead of physical form, the chances of it being misplaced, forged or stolen eliminates.

    Everything which is done manually involves a high expenditure of resources on clerical work and stationery. CTS has reduced the burden of banks in the following ways: 1. Reduces Cost: The physical transfer of the paper instruments from one place to another involves specific cost which has been eliminated by the use of CTS. 2. Enhances Banks’ Liquidity Management: By implementing grid CTS where the cheques from the different banks are sorted by the Clearing House of a particular grid. Such as CTS Chennai system, which clears the cheques of Mysore and Puducherry to save cost and manage the liquidity in operations.

    CTS is a quite secured and advanced method of carrying out an automatic cheque clearance process. To avoid fraudulent activities, CTS has the following add-on benefits: 1. MICR Reject Repair Flag: The use of MICR reject repair technology is done under CTR to correct the mistakes and improve the data quality automatically. 2. Reduces Risk of Data or Image Manipulation: The use of encryptions and digital signatures minimizes the risk of any manipulation or forgery. 3. Improves Security and Automation: PKI ensures the security of data throughout the CTS process. The CHI provides for automated transmission of all the data.

  10. What is Cheque Truncation System and its benefits

    Mar 08, 2019 · Cheque Truncation System (CTS) was introduced by the Reserve Bank of India (RBI) for faster clearing of cheques. This system is a move in the right direction and will ensure efficiency, security, transparency and faster credit of the funds which will benefit both the customer and the bank.

  11. What is Cheque Truncation System? CTS Benefits and Highlights ...

    Cheque Truncation System (CTS) is a cheque clearing system undertaken by the Reserve Bank of India (RBI) for quicker cheque clearance. As the term proposes, truncation is the course of discontinuing the flow of the physical cheque in its way of clearing. Instead of this an electronic image of the cheque is transferred with vital essential data.