Does a business have to take my cheque?

FRIDAY, MARCH 2: I saw a sign the other day in a local business that said “In God We Trust, all others must pay cash”.  This was their way of advising customers that they do not accept cheques, which is becoming a common practice with local businesses and some Government departments as well.

The Department of Consumer Affairs has had a few queries lately from consumers asking whether businesses can do this because some consumers believe that cheques are legal tender.

Can a business refuse to accept cheques? Yes, they most certainly can because a cheque is not considered legal tender and businesses can set their own terms and conditions of sale.

A cheque is a promise that the funds will be there to cover it. In Bermuda paper currency and coins are considered legal tender (if you look at Bermuda paper money it says “This note is legal tender issued under the Bermuda Monetary Authority Act 1969). All other forms of payment are at the discretion of the business.

There are a few reasons why payments by cheque have become unpopular with businesses — cheques are comparatively costly, can take longer to process and they can be forged.

However, after speaking to some local businesses about why they don’t accept cheques the main reason is because bouncing cheques due to insufficient funds has become a more frequent occurrence.

Both consumers and businesses are writing cheques knowing that the funds are not available to cover them.

This practice is costly to everyone involved. Not only do the consumer and/or business that wrote the cheque incur a non-sufficient fund charge but it is an expensive hassle for the business who accepted the cheque – they are charged a fee and have the added expense of trying to recover the funds.

In the old days, prior to the popularity of electronic banking and on-line payments, cheques were a popular form of payment and businesses trusted that your cheque was ‘good’.

Businesses today can no longer work on a trust system when it comes to accepting cheques for fear of it bouncing, just as they can ill afford to jeopardize their cash flow with consumers who have received goods and/or services and continue to promise that “the cheques in the mail”, for months and months after.

There are still businesses out there that accept cheques, albeit some only from customers they trust and who have a good payment history.

If you are going to make a purchase and/or pay a bill to a company that accepts cheques, it is important that careful consideration be given to all the costs and complications associated with bouncing it.

Ask yourself! Are there enough funds in my account to cover the cheque? If this cheque bounces is it worth paying the insufficient funds bank fees? Do I want to run the risk of being turned over to a collection agency and having to pay their fees as well?

When making purchases focus on your needs and not your wants. If there is insufficient money in your account to pay for that item or service, you probably can’t afford it and definitely should not write a cheque to pay for it.

One final point to remember, it is against the law to write a cheque knowing that the funds are not available – this is fraud.

Honey Adams is the education officer for the Department of Consumer Affairs.