Traveler’s Cheque (also spelled as “Traveller’s Check” in some countries) is a preprinted, fixed-amount, and secure financial instrument used by travelers as a form of payment for goods and services while traveling. It was first introduced in the 19th century as a safer alternative to carrying cash during travel.
A traveler’s cheque is generally issued by banks or financial institutions and comes in a booklet form. Each cheque is signed twice: once by the purchaser at the time of purchase and again at the time of use. The cheque is also accompanied by a separate piece of paper that contains a unique serial number, which serves as a security feature to prevent fraud.
Traveler’s cheques can be used in place of cash or credit cards, as they offer convenience, security, and ease of use. They can be used to pay for goods and services, and can also be exchanged for local currency at banks or exchange offices.
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Example of how a Traveler’s Cheque can be used:
Suppose John is traveling to Europe and has purchased a $1,000 traveler’s cheque from his bank before leaving. During his trip, John needs to pay for a hotel stay, which costs €800. John presents the traveler’s cheque to the hotel and signs it in their presence. The hotel staff verifies John’s signature and the unique serial number on the cheque before accepting it as payment. The hotel then gives John €200 in cash as change.
Summary
A traveler’s cheque is a secure and convenient form of payment for travelers. It can be used in place of cash or credit cards, and can be exchanged for local currency at banks or exchange offices. Each cheque is signed twice by the purchaser and accompanied by a separate piece of paper with a unique serial number, which serves as a security feature to prevent fraud.