Pay to the order of meaning on a check

This post promises to share with you what pay to the order of means on checks.

Well, there are many little things we don’t pay attention to.

It is highly ridiculous to find out that we don’t even know what some of these little things stand for.

An example is the phrase “pay to the order of” found on a check.

If you have held a check in your hands, you would have seen this, and if you have not, pick up one now to see it.

So,

What does this phrase,  “pay to the order of” mean?

Before we take a look at what the phrase means, it is pertinent to indicate what a cheque is or means.

In a few words count, a cheque is a piece of paper written by someone authorizing his financial institution to pay a particular amount of money to the person, group, or institution named on that check.

A check will normally have spaces for the name of the person to be paid, the amount to be paid, the date, and the signature of the person writing the check.

It means a check is an authority on its own created by the owner of the money which must be obeyed by the financial institution.

It is legally binding on both the writer and the financial institution.

When you take a look at a typical check, one of the places to be filled by the writer is where you have the phrase “pay to the order of” and it is easy to understand when you see a check.

It is the place where the writer inputs the name of the individual, group, or organization to receive the amount of money stated on the cheque.

What this means is that the place with the phrase “pay to the order of” is nothing more than the beneficiary of the check.

That is, the bearer of the name there will be paid the amount stated on the cheque.

Other meaning of pay to the order of

“Pay to the order of” is a phrase used on checks or other financial documents to specify the person or entity to whom the payment should be made.

The term “order” is used to indicate that the payment is to be made to the person or entity named on the document, subject to any restrictions or conditions that may be indicated.

The person or entity named as the recipient of the payment is said to be the “payee.”

The person writing the check or other financial document is the “maker.”

When the maker writes “pay to the order of” followed by the payee’s name, they are directing the financial institution holding the funds to pay the specified amount to the named payee.

As such, a check that will be cashed cannot have an empty “pay to the order of” because someone must receive the amount on the check.

It is important to note that, anyone with his name on the cheque in the space for “pay to the order of” must have a valid means of identification to prove that he is one cashing the cheque.

Without this, the financial institution may refuse to pay the money to him even though the owner of the fund has authorized the payment of the money to him.

A word of caution here, the name in the space of “pay to the order of” must be legibly written and it must be the official name of the person going to cash the check.

If this is not strictly adhered to, the check may bounce meaning that the bearer of the name on the check will not be paid.

That will be on the basis that they are unable to verify the identity of the person.

This is one of the numerous reasons a cheque may bounce.

So, the next time you hear about “pay to the order of” on a check, I believe you already know what it stands for and how it must be written to achieve the objective for which it was included on the check.