What is the process for clearing a cheque?

The process for clearing a cheque involves several steps that facilitate the transfer of funds from the payer’s bank account to the payee’s bank account. When the payee deposits the cheque, their bank initiates the clearing process by sending it to the payer's bank. This is done through a secure network that ensures the transaction is processed accurately.

Once the cheque is received by the payer's bank, the bank verifies that the payer has sufficient funds to cover the amount of the cheque. Following this verification, the funds are then transferred electronically from the payer's account to the payee's account. This step is crucial, as it ensures that the monetary transaction is properly authenticated and processed, resulting in the payee receiving the funds without needing to meet the payer in person.

This method of clearing checks is designed to optimize efficiency and reduce the risks associated with handling cash or relying on physical exchanges. The other options do not reflect the structured and secure process that banking institutions have established for cheque clearance.