What does the 'on us approach' refer to in cheque clearing?

The 'on us approach' in cheque clearing refers specifically to the situation where the cheque is cashed at the payer's financial institution. In this context, the term 'on us' indicates that the bank where the cheque is being presented is also the bank that issued the cheque. As a result, the processing of the cheque happens internally within that bank, thereby simplifying the clearing process.

When a cheque is cashed 'on us', it typically means the funds can be readily verified and made available without the need for inter-bank processing, which is a more complex procedure used when different banks are involved. This process reduces the risk and time associated with clearing, benefiting both the payer and payee by ensuring faster access to the funds.

In contrast, when a cheque is presented at a correspondent bank, involves different financial institutions, or goes through the cheque clearing system, it does not fall under the 'on us' category, as those scenarios require additional layers of processing and verification.