Traveler’s checks are protected against loss or theft and accepted as legal tender by most businesses. They are becoming less common due to the rise of digital financial networks. American Express is the largest issuer. Payees are protected from fraud, and buyers are protected against loss or theft. Identification may be required, and payees must give change if necessary.
A traveler’s check is issued by a bank or other organization and is protected against loss or theft. They are issued by many banks around the world in several of the world’s major currencies and are generally treated as legal tender or cash by most businesses and individuals, even where they are not issued. They accept credit or debit cards. Many people wear them on vacation, especially when traveling to another country. However, its use is becoming less common with the development of global digital financial networks.
The first institution to issue traveler’s checks was a bank in London, England in 1772. However, widespread use did not begin until the American Express Company began producing them in 1891. As of 2011, they are the largest issuer of traveler’s checks in the world . Prepaid money and debit cards that will work in many countries around the world are making traveler’s checks less common.
The payee who accepts a traveler’s check as payment for goods or services is protected from fraud by the system under which the checks are purchased and issued. When a person buys traveler’s checks, which can be issued in various leading currency denominations, he signs the checks as soon as they are received. The buyer will also be issued a receipt with the serial numbers on the checks.
To use a traveler’s check, the buyer must sign the check again, in the presence of the payee or the person accepting the check on the payee’s behalf. This allows the payee to ensure that the person paying with a traveler’s check is the same person who originally purchased it. The fact that the check is backed by funds already transferred to the issuer by the buyer protects the payee from fraud. The buyer is protected against the theft or loss of his traveler’s checks as long as he keeps the receipt and, in such case, can expect a refund or replacement from the original issuing bank or other financial institution.
It is customary to ask to see the buyer’s identification when accepting traveler’s checks as an added deterrent to fraud and theft. After accepting a traveler’s check, the payee must give change, if necessary, as if they had received cash from the buyer. The payee can deposit the traveler’s check in their own bank like any other check.
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