Knowledge (XXG)

Cheque clearing

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288:"The automated clearinghouse (ACH) system is a nationwide network through which depository institutions send each other batches of electronic credit and debit transfers. The direct deposit of payroll, social security benefits, and tax refunds are typical examples of ACH credit transfers. The direct debiting of mortgages and utility bills are typical examples of ACH debit transfers. While the ACH network was originally used to process mostly recurring payments, the network is today being used extensively to process one-time debit transfers, such as converted check payments and payments made over the telephone and Internet." 160:
while the second clerk from each bank stood outside the table facing the other clerk from the same bank. Each of the outside clerks carried a file box. When the manager signalled, all of the outside clerks stepped one position to the left, to face the next seated clerks. Each clerk outside the table would then hand over the cheques drawn on the bank of the seated clerk who they were now facing, and the inside clerk, in turn, would pay the outside clerk for those cheques in cash.
283:"In 1974, ACH Associations from California, Georgia, New England and the Upper Midwest region formed NACHA within the American Bankers Association. Following that, the initial ACH rules were approved, which made Prearranged Payment and Deposit or Direct Deposit, the first ACH transaction type, effective. By 1978, it was possible for two financial institutions located anywhere in the U.S. to exchange ACH payments under a common set of rules and procedures." 225:: cheques would be sorted by hand according to the first two digits. The cheques would be removed, and each stack sorted into the same dividers by the third and fourth digits. The process was iterated until the cheques were completely sorted. Top Tab Key used a physical mechanism: holes were punched in the top of each cheque representing the values of various digits, and metal keys used to physically move them until sorted. 867: 292:"CHIPS is the largest private-sector U.S.-dollar funds-transfer system in the world, clearing and settling an average of $ 1.5 trillion in cross-border and domestic payments daily. It combines best of two types of payments systems: the liquidity efficiency of a netting system and the intraday finality of a 188:
Cheques drawn on another bank (termed "the issuing bank" or "paying bank") need to be "presented" to the other bank before the deposit bank receives payment to cover the amount credited to the depositor's account. In the absence of the paying bank notifying the deposit bank of the "special clearance"
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Cheques came into use in England in the 1600s. The person to whom the cheque was drawn (the "payee") could go to the drawer's bank ("the issuing bank") and present the cheque and receive payment. Before payment, the drawer's bank would check that the cheque was in order – e.g., that the signature was
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For cheques drawn on a customer of the same bank, the bank would, usually on the next business day, ensure that the cheque is in order and debit the account of the drawer, and the cheque would be taken to have been cleared. A cheque is not in order if, for example, the date is invalid, the drawer's
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Beginning at 5 pm, a clerk for each debtor bank was called to go to a rostrum to pay in cash to the Inspector of the Clearing House the amount their bank owed to other banks on that day. After all of the debtor clerks had paid the Inspector, each clerk for the banks that were owed money went to the
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In a large room in Lombard Street, about 30 clerks from the several London bankers take their stations, in alphabetical order, at desks placed round the room; each having a small open box by his side, and the name of the firm to which he belongs in large characters on the wall above his head. From
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and normally results in a credit to the account at the bank of deposit, and an equivalent debit to the account at the bank on which it was drawn, with a corresponding adjustment of accounts of the banks themselves. If there are not enough funds in the account when the cheque arrived at the issuing
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on Wall Street, New York in 1853. Instead of the slow London procedure in which each bank clerk, one at a time, stepped up to an Inspector's rostrum, in the New York procedure two bank clerks from each bank all worked simultaneously. One clerk from each bank sat inside a 70 foot long oval table,
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Thus several such transactions could be conducted simultaneously, across the oval table. When the manager signaled again, this procedure was repeated, so that after about six minutes, the clerks had completed all their assigned transactions and were back to their starting locations, and holding
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was established in the United States in 1913 to act as a central, well-capitalized clearing house. The objective was to prevent the occasional panics, where banks would refuse to accept cheques drawn on banks whose solvency was uncertain. The Federal Reserve can physically accept and transport
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rostrum to collect the money owed to their bank. The total cash paid by the debtor banks equaled the total cash collected by the creditor banks. On the rare occasions when the total paid did not equal the total collected, other clerks working for the Inspector would examine the
296:." Organized in 1970 by eight New York banks who were members of 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 finality through a real-time system. 180:
When a bank customer deposits a cheque, which may be drawn on any bank, the bank would credit the depositor's account with the amount of the cheque. However, the amount so credited is "not available" to the depositor until the cheque has been cleared by the paying bank.
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As volume grew, more efficient sorting methods were developed. Approaching the 1940s, two popular methods were Sort-A-Matic and Top Tab Key. Sort-A-Matic involved a set of metal or leather dividers numbered 00 through 99, operated to implement a form of
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of the cheque, for example, following a request from the deposit bank, the funds become available after the passing of an agreed "clearance period", commonly three business days, when the depositor's account is described as comprising "cleared funds".
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Until around 1770 an informal exchange of cheques took place between London banks. Clerks of each bank visited all of the other banks to exchange cheques, whilst keeping a tally of balances between them until they settled with each other. Daily cheque
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that of the drawer, that the date was valid, that the cheque was properly set out, etc. Alternatively, the payee could deposit the cheque with their own bank who would arrange for it to be presented to the issuing bank for payment.
96:, established in London in the early 19th century. It was founded by Lubbock's Bank on Lombard Street in a single room where clerks for London banks met each day to exchange cheques and settle accounts. In 1832 185:
signature is not like the one held by the bank, the wrong number of signatories have signed the cheque, etc. There must also be sufficient cleared funds in the account before the drawer's account is debited.
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or other device, and attach the image to a deposit. The deposit bank would use the cheque image in the normal electronic clearance process, though in this case MICR data would not be available.
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made it possible for businesses and bank customers to deposit cheques without delivering them to their own banks. In the process, a depositor would make an image of the physical cheque with a
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is drawn to the bank in which it was deposited, usually accompanied by the movement of the cheque to the paying bank, either in the traditional physical paper form or digitally under a
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time to time other clerks from every house enter the room, and passing along, drop into the box the cheques due by that firm to the house from which this distributor is sent.
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exactly the amount of cash their papers said they should be holding. Clerks were fined if they made errors and the amount of the fine increased rapidly as time passed.
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If the cheque is not in order, or if there are not enough cleared funds in the account when the cheque arrived at the issuing bank, the cheque would be returned as a
231:(MICR) was developed and commercialized in the 1950s, and enabled computers to reliably read routing and account numbers and automated the sorting of paper cheques. 148:
opened the first clearing house in 1818 in Boston, and one was incorporated in New York in 1850. A clearing house for bankers was opened in Philadelphia in 1858.
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were set up to streamline the process by collected all cheques drawn on other banks, and collecting payment from those banks for the total to be cleared.
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in the City of London, to exchange all their cheques in one place and settle the balances in cash. The first organization for clearing cheques was the
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was introduced in various countries, starting in the 1990s, to allow electronic images to be made of physical cheques, for electronic clearance.
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All banks might have clerks to take cheques drawn on other banks to those banks, and wait for payment.
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The Americans improved on the British check clearing system and opened a bankers' clearing house, the
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Banking and Currency Reform Hearings of the Subcommittee of the Committee on Banking and Currency
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began around 1770 when the bank clerks met at the Six Bells, a tavern in Dove Court off
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of documents so that the numerical errors could be found and corrected.
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systems obviated the need for paper. Two methods were developed: the
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bank, the cheque would be returned as a dishonoured cheque marked as
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Campbell-Kelly, Martin (October 2010). "Victorian Data Processing".
275:(ACH) for smaller payments which complete in two business days, and 883: 819: 339: 311: 462:(Vol. 2) (1900) Logansport, Indiana: A.W. Bowen & Co., p. 873 990: 943: 774: 751: 46: 694: 825: 104:
in which Babbage described how the Clearing House operated:
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Nevin and Davis, The London Clearing Banks, (1970) pp.40-41
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is the process of moving cash (or its equivalent) from the
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The Progressive Men of the Commonwealth of Pennsylvania
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As the automation of cheque processing improved, fully
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Bankers' clearing house: what it is and what it does
999: 882: 835: 800: 728: 125:, the Bankers' Clearing House was evacuated to the 482:https://dl.acm.org/doi/pdf/10.1145/1831407.1831417 106: 132:The clearing operation is now operated by the 706: 8: 279:(CHIPS) for larger value same day payments. 169:Federal Reserve System check clearing system 27:Process of exchanging a cheque for its funds 368: 366: 797: 713: 699: 691: 102:The Economy of Machinery and Manufactures, 567:"The Evollution of a Strong ACH Network" 277:Clearing House Interbank Payments System 362: 136:, the United Kingdom's clearing house. 553: 407: 374:"what is check clearing? - definition" 1079:Commodity theory of money (Metallism) 7: 376:. Business Directory. Archived from 592:"Automated Clearing House Services" 57:system. This process is called the 229:Magnetic ink character recognition 134:Cheque and Credit Clearing Company 25: 1056:Akkadian standards of measurement 241:Substitute check in United States 865: 651:Federal Reserve Bank of New York 742:(W. Mesoamerica & N. Andes) 196:marked appropriately, such as " 621:The Clearing House Association 445:U.S. House of Representatives 1: 1059: 1007:List of historical currencies 912:Central bank digital currency 670:Ingram, Thomas Allan (1911). 342:- the US national ACH network 1113:Standard of deferred payment 314:- the UK equivalent of CHIPS 18:Bankers' clearing house 435:. Banker's Library. Pitman. 429:Matthews, Philip W (1921). 318:Electronic Benefit Transfer 1219: 530:"Check Services Offerings" 238: 153:Clearing House Association 860: 496:Communications of the ACM 329:Electronic funds transfer 1203:Payment clearing systems 1096:Quantity theory of money 917:Chattel/movable property 323:Electronic Check Council 306:Automated clearing house 273:Automated Clearing House 683:Encyclopædia Britannica 508:10.1145/1831407.1831417 471:Campbell-Kelly, page 21 419:Campbell-Kelly, page 20 94:Bankers' Clearing House 1155:Complementary currency 1084:Credit theory of money 1044:Depository institution 673:"Clearing-house"  200:" or "present again". 111: 1138:Digital gold currency 480:name="Campbell-Kelly, 1017:Coincidence of wants 837:Representative money 458:Blanchard, C. (Ed.) 251:The legalisation of 235:Electronic clearance 198:non-sufficient funds 64:non-sufficient funds 1165:Time-based currency 596:The Federal Reserve 556:, pp. 476–477. 263:Electronic payments 1034:Clearinghouse bank 722:Medium of exchange 380:on August 21, 2014 269:electronic payment 194:dishonoured cheque 129:in Staffordshire. 1175: 1174: 1160:Sectoral currency 1106:Market monetarism 1069:Code of Hammurabi 858: 857: 850:Gold certificates 246:Cheque truncation 216:Cheque processing 55:cheque truncation 16:(Redirected from 1210: 1143:Virtual currency 1128:Digital currency 1064: 1061: 1024:Bureau de change 875: 870: 869: 868: 801:Domestic animals 798: 715: 708: 701: 692: 687: 675: 662: 661: 659: 657: 643: 637: 636: 634: 632: 623:. Archived from 613: 607: 606: 604: 602: 588: 582: 581: 579: 577: 563: 557: 551: 545: 544: 542: 541: 532:. Archived from 526: 520: 519: 491: 485: 478: 472: 469: 463: 456: 450: 443: 437: 436: 426: 420: 417: 411: 405: 399: 396: 390: 389: 387: 385: 370: 351:Substitute check 157:Bank of New York 123:Second World War 39:American English 21: 1218: 1217: 1213: 1212: 1211: 1209: 1208: 1207: 1178: 1177: 1176: 1171: 1123:Unit of account 1062: 995: 981:Promissory note 959:Deposit account 932:Cheque clearing 886: 878: 871: 866: 864: 854: 831: 796: 764:Precious metals 731: 724: 719: 669: 666: 665: 655: 653: 645: 644: 640: 630: 628: 615: 614: 610: 600: 598: 590: 589: 585: 575: 573: 565: 564: 560: 552: 548: 539: 537: 528: 527: 523: 493: 492: 488: 479: 475: 470: 466: 457: 453: 444: 440: 428: 427: 423: 418: 414: 406: 402: 397: 393: 383: 381: 372: 371: 364: 359: 302: 265: 243: 237: 218: 213: 205:Clearing houses 178: 142: 127:Trentham Estate 98:Charles Babbage 77: 72: 31:Cheque clearing 28: 23: 22: 15: 12: 11: 5: 1216: 1214: 1206: 1205: 1200: 1195: 1190: 1180: 1179: 1173: 1172: 1170: 1169: 1168: 1167: 1162: 1157: 1150:Local currency 1147: 1146: 1145: 1140: 1135: 1133:Cryptocurrency 1125: 1120: 1118:Store of value 1115: 1110: 1109: 1108: 1103: 1093: 1092: 1091: 1081: 1076: 1073:§100; §122–125 1066: 1063: 2150 BC 1053: 1048: 1047: 1046: 1036: 1031: 1026: 1021: 1020: 1019: 1009: 1003: 1001: 997: 996: 994: 993: 988: 983: 978: 973: 968: 963: 962: 961: 951: 946: 941: 936: 935: 934: 924: 919: 914: 909: 904: 898: 896: 880: 879: 877: 876: 861: 859: 856: 855: 853: 852: 847: 841: 839: 833: 832: 830: 829: 828:(Tibet, China) 823: 817: 811: 804: 802: 795: 794: 789: 784: 778: 772: 771:(cotton cloth) 766: 761: 755: 749: 743: 736: 734: 726: 725: 720: 718: 717: 710: 703: 695: 689: 688: 678:Chisholm, Hugh 664: 663: 638: 608: 583: 558: 546: 521: 486: 473: 464: 451: 438: 421: 412: 410:, p. 477. 400: 391: 361: 360: 358: 355: 354: 353: 348: 346:Payment system 343: 337: 332: 326: 320: 315: 309: 301: 298: 290: 289: 285: 284: 264: 261: 253:remote deposit 236: 233: 217: 214: 212: 209: 177: 174: 141: 138: 90:Lombard Street 76: 73: 71: 68: 59:clearing cycle 43:bank clearance 35:check clearing 26: 24: 14: 13: 10: 9: 6: 4: 3: 2: 1215: 1204: 1201: 1199: 1196: 1194: 1191: 1189: 1188:Banking terms 1186: 1185: 1183: 1166: 1163: 1161: 1158: 1156: 1153: 1152: 1151: 1148: 1144: 1141: 1139: 1136: 1134: 1131: 1130: 1129: 1126: 1124: 1121: 1119: 1116: 1114: 1111: 1107: 1104: 1102: 1099: 1098: 1097: 1094: 1090: 1087: 1086: 1085: 1082: 1080: 1077: 1075:; c. 1750 BC) 1074: 1070: 1067: 1057: 1054: 1052: 1049: 1045: 1042: 1041: 1040: 1037: 1035: 1032: 1030: 1027: 1025: 1022: 1018: 1015: 1014: 1013: 1010: 1008: 1005: 1004: 1002: 998: 992: 989: 987: 984: 982: 979: 977: 974: 972: 969: 967: 964: 960: 957: 956: 955: 952: 950: 947: 945: 942: 940: 937: 933: 930: 929: 928: 925: 923: 920: 918: 915: 913: 910: 908: 905: 903: 900: 899: 897: 894: 890: 885: 881: 874: 863: 851: 848: 846: 843: 842: 840: 838: 834: 827: 824: 821: 818: 815: 812: 809: 808:Water buffalo 806: 805: 803: 799: 793: 790: 788: 785: 782: 779: 777:(Roman world) 776: 773: 770: 767: 765: 762: 759: 756: 753: 750: 748:(Mesoamerica) 747: 744: 741: 738: 737: 735: 733: 727: 723: 716: 711: 709: 704: 702: 697: 696: 693: 685: 684: 679: 674: 668: 667: 652: 648: 642: 639: 627:on 2017-03-20 626: 622: 618: 612: 609: 597: 593: 587: 584: 572: 568: 562: 559: 555: 550: 547: 536:on 2013-03-25 535: 531: 525: 522: 517: 513: 509: 505: 502:(10): 19–21. 501: 497: 490: 487: 483: 477: 474: 468: 465: 461: 455: 452: 448: 442: 439: 434: 433: 425: 422: 416: 413: 409: 404: 401: 395: 392: 379: 375: 369: 367: 363: 356: 352: 349: 347: 344: 341: 338: 336: 333: 330: 327: 324: 321: 319: 316: 313: 310: 307: 304: 303: 299: 297: 295: 287: 286: 282: 281: 280: 278: 274: 270: 262: 260: 258: 254: 249: 247: 242: 234: 232: 230: 226: 224: 215: 210: 208: 206: 201: 199: 195: 190: 186: 182: 175: 173: 170: 165: 161: 158: 154: 149: 147: 140:United States 139: 137: 135: 130: 128: 124: 119: 117: 110: 105: 103: 99: 95: 91: 87: 81: 74: 69: 67: 65: 60: 56: 52: 48: 44: 40: 36: 32: 19: 1039:Savings bank 1029:Central bank 966:Legal tender 931: 873:Money portal 681: 654:. 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Africa) 554:Ingram 1911 408:Ingram 1911 121:During the 116:paper trail 49:on which a 1182:Categories 1101:Monetarism 1089:Chartalism 986:Redemption 976:Possession 939:Clay token 792:Trade bead 746:Cocoa bean 730:Commodity 540:2013-03-27 384:August 21, 357:References 257:smartphone 239:See also: 223:radix sort 211:Automation 810:(SE Asia) 740:Axe-money 176:Operation 172:cheques. 155:, in the 86:clearings 949:Currency 927:Clearing 907:Banknote 902:Bailment 822:(Arabia) 783:(barley) 769:Quachtli 516:30255647 300:See also 1198:Cheques 1193:Banking 1000:General 954:Deposit 944:Coinage 816:(Hindu) 758:Manilla 680:(ed.). 656:5 April 647:"CHIPS" 631:5 April 617:"CHIPS" 601:5 April 576:5 April 484:page 21 335:Fedwire 75:England 70:History 1012:Barter 971:Notary 922:Cheque 787:Shells 781:Shekel 754:(rice) 514:  51:cheque 893:Token 884:Money 820:Camel 732:money 676:. 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Index

Bankers' clearing house
American English
bank
cheque
cheque truncation
clearing cycle
non-sufficient funds
clearings
Lombard Street
Charles Babbage
paper trail
Second World War
Trentham Estate
Cheque and Credit Clearing Company
Suffolk Bank
Clearing House Association
Bank of New York
Federal Reserve System check clearing system
dishonoured cheque
non-sufficient funds
Clearing houses
radix sort
Magnetic ink character recognition
Substitute check in United States
Cheque truncation
remote deposit
smartphone
electronic payment
Automated Clearing House
Clearing House Interbank Payments System

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