Deals that require third-party confirmation can be very useful. You can give a friend money if you receive a check. This check is an excellent choice for those who do not have a bank account.
If you’re engaged in a third-party check transaction, you may need to talk with a bank employee about it. In this situation, it is helpful to know some basic terminology. First, the remitter (or the person who makes the check) is the one who actually writes it. The remitter makes checks payable to payees or those who will cash them.
What is a third party check?
As normal checks need to be processed in two phases, third-party checks also need to be processed in two. Two parties make up the bulk of checks, meaning that they can be received by one person or company from another.
This is also known as a “third-party check” when the original payee forwards the cheque to another party and cashes it.
Due to increased fraud risk, many companies are careful about cashing or arranging for third-party checks. If a person misplaces a check they’ve approved, an unexpected third party may discover the check and approve it as the other payee. Any money that was lost would be the lender’s responsibility.
Banks and Credit Unions That Don’t Support Third-Party Checks
Many prominent American banks will cash third-party checks for account holders. Some banks will cash a check from a third party for customers, provided they have written it. Additional fees may apply to non-account holders. Laws vary. You’ll need to provide valid photo identification, and the other signing party may also need to be available.
Many major American banks are listed (check out). Sonoma’s FeesFor account holders, these banks will accept and cash third-party checks. Some banks will cash third-party cheque payments for non-customers if they have written the check. Additional fees may apply to non-account holders. laws differ.
Customer service personnel confirmed that the following banks or credit unions don’t cash third party checks:
- Alliant Credit Union
- Ally Bank
- Bank of the West
- Charles Schwab Bank
- Citizens Bank
- Discover Bank
- KeyBank
- PenFed Credit Union
- Regions Bank
- Wells Fargo
Banks That Permit Third-Party Checks: Fees & Requirements Detailed
| Name of the Company | Bank or credit union | Fees for non-account holders |
| Bank of America | Bank | $8 for checks above $50 |
| BB&T | Bank | $8 for checks above $50 |
| Chase Bank | Bank | $8 for checks above $50 |
| ACE Cash Express | Pay cash in the store | Locations can vary |
| Connexus Credit Union | Credit union | Not available |
| First National Bank | Bank | $10 |
| HSBC | Bank | Individual checks made on HSBC are completely free. Commercial checks over $100 are $3. |
| M&T Bank | Bank | Minimum of 2% of the total check amount (3 minimum). |
| Navy Federal Crediting Union | Credit union | None |
| PNC Bank | Bank | Checks over $25 are eligible for $2 off |
| SunTrust Bank | Bank | $7 for checks over $50 |
| TD Bank | Bank | $7 |
| U.S. Bank | Bank | $7 (only checks drawn on U.S. Banks) |
Risks and Issues: Why Banks Don’t Always Permit Third-Party Checks
Third-party verification increases the risk of theft and fraud. As a result, banks and credit unions have rigorous guidelines for approving third-party checks, with some refusing to accept them altogether.
The most trustworthy depositors are the only ones banks will accept. They do not know whether a valid check was issued with a falsified endorsement. The risk of earlier endorsements is on the banker collecting. Numerous banks are therefore cautious.
Banks won’t accept checks from third parties unless they can identify the payee. This prevents people from redeeming checks that don’t belong to them.
Your state’s Contract Law outlines the hazards of taking any check for a deposit. I refer to Section 3-417. A third party check is required to ensure that all certificates have been double-checked by the drawee bank.
Based on the state’s limitation period, the principal payee may have anywhere from 60 days to three years to contact the check’s maker and assert that their signature was forged.
Third-Party/Suspicious Endorsed Checks Negotiated Abroad
Third-party checks are acceptable for small businesses, individuals and large organizations. This works in places where the economic system isn’t as developed as it is in the U.s, and the dollar is in growing demand. In India, for instance, it is possible to cash a check from a third party.
However, misapplication is possible. Third-party confirmations have been used in fraud, theft, tax avoidance and other illegal behaviours in the U.S. and around the globe.
Many financial institutions around world are reluctant to accept third-party checks or endorsed checks because of the risk of payment default. In some countries, it is illegal or discouraged.
To counterbalance the risk of non-payment, money exchange businesses and other financial institutions usually charge a three- to five-percentage-point fee when accepting signed checks. Third-party checks may not be accepted in all cases. This can cause payment delays of several days.
Suspicious Activity reports indicate that U.S.-dollar third party checks are being sent overseas to banks. However, the payees and payers appear not to be connected to the exact location of the checks.
The checks, on the other hand are part of the international cash letter package sent to correspondent banks in America once they have been negotiated.
Places That Don’t Cash Third-Party Checks
Some institutions, such as Bank of America, Chase, Citibank, M&T, and HSBC, permit third-party checks. Check-cashing stores such as ACE Cash Express, Check ‘N Go, and The Check Cashing Store permit third-party checks.
You will need to provide proof of identity. In some cases, both payees might be required to be present. Additional charges may apply. Third-party cheques rarely get cashed in convenience and grocery stores.
Third-party endorsements have been used in fraud, money laundering, tax avoidance, and other criminal activities both here and abroad. These checks are used extensively in black market currency exchanges in the Middle East, Africa and the Americas. This is often done in cases involving many illegal activities.
Sign the Back of your Check in the Top Section.
In the Endorsement’s Area section, sign the back of the check. On the reverse of every check is a section that says, “Bank of America third party checks here.” This is where you’ll sign your name exactly as it appears on the check’s front.
Because banks are unwilling to cash checks made payable to companies, you’ll almost certainly have to deposit most of your checks. It is feasible to cash checks made payable to a company, but it isn’t easy. Cashing a check is just like withdrawing money.
Many owners may own businesses. Withdrawing or spending money could require their consent. Regarding company checks, banks are generally hesitant to cash them if they don’t know the individual who wrote them.
Ensure the Person’s/Entity’s Bank Will Accept the Check
To get a check over to someone else, endorse it, and then write “Pay to the order of:” and the person’s name. With the message, your signature indicates that you’re relinquishing your claim to the check and passing it to the individual you named.
You might try cashing your cheque at the issuing bank if you have immediate money needs. By taking the check to the bank that issued it, you avoid a significant amount of the check transaction procedure. The bank can examine the account from which the check was drawn immediately to verify that there are sufficient funds to cover this transaction.
Accepting third-party checks could pose a risk
Check scams often confuse third-party checks with third-party checks. This may not always be true. An alternative is for a third party, who can then retrieve the cheque that was not written to them.
Third-party inspections are still a concern for many banking institutions. Due to this type of risk, a bank institution might not recognize third-party checks you submit.
Financial institutions are not required to accept your check if it isn’t legally required. Third-party checks can include a modification of beneficiary and verification from the original recipient. These orders are not binding on banks, but many might choose not to comply due to possible risks.
With third-party checks, fraud is more common. The following scenario is possible: You write a check, then place it on the curb. An irresponsible individual, however, discovers the check, and substitutes your name with theirs. Faking your signature gives the scam the appearance it is valid. This type of deception is why many institutions are wary about third-party checks.
Your bank should be contacted before you bring in a third-party check. If you’re unsure whether your institution permits third-party checks, call ahead before coming in to redeem your check. You may need additional instructions if the bank accepts third party checks.
Third-Party Check vs. Second Party
Below are the differences between Third Party Checks (or Second Party Checks).
| Third-Party Inspections | Second Party Checks |
| Third-party checks are ones that an account holder issues to a beneficiary so that money may be withdrawn from and paid to the recipient’s account. | These are checks that a check writer sends to someone else. Then, the third party receives it, usually a company. |
| Walmart does not pay checks to third parties. | Walmart can cash two-party checks. |
| The check writer must first sign an endorsement on a check from a third party. | To issue a check, the person must sign an endorsement on a check from a second party. |
| You must put “Pay to the Order of” and the third party’s name below your signature on a check to approve it to them. | Both parties must sign below the “Pay to the Order of” line on a second-party check to approve it. |
Different Third-Party Checks
A third-party cheque can be drawn from your brokerage account, 401K, mutual fund, or other accounts. Others include tax rebates, traveller’s checks, or share drafts from credit unions. A check that you want to cash is another example of a “third-party” check. It was issued to someone else, but it has been handed over to you.
How do I cash a Third-Party check?
Both participants must provide a valid picture ID, such as a driver’s license or state identity card, to cash a third-party check. The teller will give the cash after verifying the signatures and IDs. If you don’t have an account, some institutions charge a fee for cashing checks; nevertheless, members get the service free.
The pros and cons of third-party check
Below are the Pros and Cons to Third-Party Check.
| Pros | Cons |
| You can find it if you lose it | Included with transaction fees |
| It can be easily set up. | Froze accounts |
| If necessary, the ability to stop payments | There are limited options |
| Flexible structure | The drawer can lose its value if it has no money in the account. |
| Small businesses are encouraged to apply. | |
| Possible post-dated |
How to perform a third-party check
These stages describe the steps required to sign over a check for a third party.
1. Before you sign a check with someone else, make a plan.
The person to whom you wish to sign the check must be chosen. You could choose to hand the check over one person, several people, or an entire organization. It’s crucial to properly organize the transaction in advance since it might be difficult to cash or deposit a third-party check.
2. Verify that the person or organization will sign-over.
You should contact the person that you wish to obtain the signed-over certificate and inquire if they are willing to do it. Both sides must agree to proceed.
3. Confirm that the recipient’s bank will accept the check.
A bank does not have to accept checks. The person or organization that you are going to sign the check will need to verify that the bank accepts it. This should be confirmed before the check is approved to avoid confusion from multiple signatures.
4. Place your signature in the endorsement upper portion of the check’s back.
A space on the reverse of each check says, “Endorse Check Here.” You should sign your name exactly as it shows on the front of the check. Knowing how to endorse a check can make it easier to hand it over to another person.
5. Write “Pay to the Order” below your signature and the third party’s name.
In the endorsement space below your signature, you must indicate the identity of the person to whom you are giving the check. This tells the bank that you are approving the check’s ownership transfer.
6. Give the check to the third party.
Now the third party has prepared the check for deposit. It is best to bring a third party to the bank when the cheque has been deposited to verify identity.
This was also highlighted in this infographic:
Why use a Third Party Check Service?
Third-party check services will save you the hassle of opening a merchant account with a bank. This allows clients such as you to make all payments via their merchant accounts. Due to their busy work schedules, modern customers are often very time-poor.
Third-party check service providers are able to satisfy the needs of customers because they are practical and fast. This is why many young people love third-party payments services.
Most Frequently Asked Questions
Is it possible for a third-party to pay an internet check?
Online cashing of third-party checks is not permitted by most banks. To prevent fraud, third party checks need to be examined more closely. Cashing third-party checks in person at a bank is the best choice.
Do you cash checks from third parties?
Third-party checks will be accepted by most banks, provided that the amount is not too large. To prevent fraud, banks might request verification or picture identification from the main payer. Third-party check cashing should be done only at banks or credit unions.
Where can I deposit my third-party check
Third-party checks may be redeemable at your bank or financial institution. You may be able to transfer checks from third parties at an ATM in rare cases. Infrequently, checks written by third parties can be cashed at ATMs in local supermarkets or through mobile app payments.
What is the best way to do a third-party inspection?
- Make a plan before you can learn how to endorse checks to third parties.
- Confirm that the person/entity has signed over a check.
- Check with the person’s/bank entities to see if the check will be accepted.
- Sign the check’s back in the Endorsement Area.
- Below your signature, write “Pay to the Order of” and the third party’s name.
How do I cash a third-party cheque without an ID?
- Deposit it at an ATM in your bank.
- ATM check cashing can be done if your bank permits it.
- The cheque should be signed by someone else.
Can I deposit a 3rd-party check into Chase?
On the other hand, Chase will permit third-party checks for deposit, even though it’s a mobile phone app, but you must have the check-in person of the owner if you plan to cash it. To deposit the money into your bank account, you will need to sign under their signature.
Can I Mobile Deposit a Third-Party Check?
Some banks need payees to approve a check with the words “for mobile depositing third party check the endorsing in its full” to post a check using an online banking app. This recommendation makes a “third-party check” which you may approve, redeem, or deposit for somebody.
How does third-party verification work?
Sometimes, a person can draft a check on your behalf. You can also sign it over to third parties, leaving it in their hands. This is called third-party banking.
Person B can give instructions to the check. This will alter the person to whom it is addressed as Person C. Third-party verification may also be possible.
This form of endorsement results in a “third-party check” that you may give to someone else to endorse, cash, or deposit. To make a third-party check, fill in the endorsement field with “Pay to the order of” and the name of the person who will receive the cash, then sign your name.
Who will cash the third-party stimulus checks?
Look no further if you’re looking for a place to redeem a third-party check online. The check that transfers liability to you must be signed by your partner. The third-party should sign the reverse to authorise the check and write “Pay to the order of your name.” If crime is suspected, both parties and picture identification may be required to redeem the check at a bank.
The first step to paying a check is to endorse it. An endorsement transfers the check’s rights to a third party due to the name, third-party check. Check cashing locations that accept third-party checks include your bank, credit union or other banks.
An ATM may allow you to deposit a cheque from a third party. It is rare to make mobile app deposits or contact the Customer Service Centers at grocery stores.
Bottom line
It’s usually only a question of adequately endorsing a third-party check to cash it. It is not the same thing as third-party check. An example of this is a check that has been written to another person but signed over or endorsed to your name. This is evident when you cash your paycheck at the bank.
You should not sign a check without any further instructions. When a check is signed in this manner, it becomes negotiable, which means that anybody who takes it to the bank may cash or deposit it, even if they’re not the payee.
To different people, the term “third party” means different things. A check cashing service may accept a personal check written by you on one of your checks, but not a check is written out to you by a third party, such as friends, family members, or business. A third-party check can also be a money order or a cashier’s check.
Third-party checks include checks written on a 401(k), trading account, fund manager, financial institution advance drafts, tax rebates, or tourist’s checks. A check you’re seeking to cash that was issued to some other party or group but has been switched over to you is an illustration of a third-party check.
There are many rules. You should also be familiar with the RBI circular regarding third-party cheque payments. However, we hope you’ve learned how third-party check works so far.
Opinions of the Author
Third-party checks are often equated with check fraud; however, this isn’t always the case. Unpaid cheques can legally be cashed by third parties. Third-party checks are still a concern for many credit unions and banks. Due to this type of checking risk, a bank might decline to cash your third-party check. The above tips will be invaluable when you are working with a third party check.
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