Although paper cheque use is declining, Canadians still write over a billion cheques a year collectively.
Since they’re not used as often, though, many have forgotten or aren’t quite sure how to read a cheque in Canada.
Whether you’re looking for a quick brush-up or you’re just learning how to read or write a cheque for the first time, you’re in the right place.
Below, I’ll show you exactly how to read a cheque in Canada (from any bank), so you’ll know how to use one the next time you’re presented with one.
For the most part, Canadian cheques are the same. Depending on the financial institution that you bank with, cheques from one bank may look a little bit different than cheques from another bank.
However, all cheques should have the same basic lines, including:
- Personal information (your name, address, postal code)
- Payee line (“pay to the order of”)
- Dollar amount line (written)
- Dollar amount box (numerical)
- Signature Line
- Endorsement (on the back of the cheque)
Additionally, the bottom of every Canadian cheque should have a series of numbers known as the MICR encoding line.
For reference, here’s a diagram of a blank cheque from TD bank:
The entire upper-left-hand corner is typically dedicated to information about the account holder.
For instance, if it’s your personal bank account, you should expect to see your full legal name.
This is typically the same name that you have listed on all of your government documents and may include titles, such as Dr., Mr., Mrs., and others.
If you’re using a business bank account, then the top line will be your legal business name that’s registered with the bank. It’s important to note that your DBA (doing business as) name is not listed.
For instance, if your legal business name is “123Alpha LLC” and the DBA name is “John’s Quick-Stop,” the former is what will be listed on your cheque.
If you change your business name, your bank should also be notified to reflect this.
Directly underneath the name of the account holder, you’ll find the address line (which may take up two lines, depending on the type of residence you’re in).
If you’re an individual, then this line will display the primary residence address that your bank has on file for you.
If you’re looking at a business cheque, then the address will be represented by your business’ primary mailing address, which your bank should have on file.
It’s important to make sure that you get the address right. If you ever have a cheque mailed back to you, you’ll want to make sure it ends up in the correct place.
I always recommend updating your chequebook and registered bank address as soon as you move to a new residence.
3. Postal Code
Part of the address should also include the postal code of the Canadian city, town, or region that you live in.
Canada has several cities and towns with the same name, so having the correct postal code ensures that cheques always end up in the right location.
4. “Pay To The Order Of”
The payee line is, by far, one of the most important lines on a Canadian cheque. This is where you’ll find the name of the individual, business, or organization getting paid.
In most cases, the name should directly line up with the individual or business that will be depositing the cheque.
For example, if you intend to write a cheque to your brother Joe (whose legal name is “Joseph”), you should use the individual’s legal name. Some banks are stricter than others on this.
Certain banks will accept the use of nicknames on cheques, while others may deny the cheque for a simple spelling error.
The same principle applies to business cheques. If you’re writing a cheque to a business, you should always write the legal business name, not the DBA name of the business.
To ensure that there’s not any confusion, you should do your best to write the name out in clear handwriting. Try to avoid using “signature script” here.
5. Dollar Amount Line
Once you’ve defined who you’re paying, it’s time to define how much you’re going to pay them. The dollar amount line is where you will write out the fully-spelled and articulated amount.
The purpose of this is to avoid any possible confusion that could result from somebody misreading the numerical value posted in the dollar amount box (see below).
It also prevents thieves from manipulating the number (turning a 63 into an 83, for instance).
The word “sixty-three” is clearly different from “eighty-three.” Even if a would-be clever thief manipulated the numerical value, they wouldn’t be able to manipulate a fully spelled-out word to match it.
Here are some examples of how to write out numerical values:
|Numerical Value||Spelled-Out Word|
|125||One-hundred and twenty-five|
|1,500||One-thousand and five-hundred|
|1,755||One-thousand, seven-hundred, and fifty-five|
For instance, if the amount is $100.20, you would write out one-hundred dollars and 20/100. Fifty cents would be represented by 50/100, seventy-five cents would be written as 75/100, and so forth.
Don’t worry about condensing the fraction down like you learned about in math class. Since there are 100 cents in a dollar, you should always write the amount as a fractional part of 100.
6. Dollar Amount Box
To the right of the written dollar amount line, you’ll find a blank box with the “$” symbol on the far left side.
This is the simplest box on the cheque and should include the numerical value of the number that you just wrote out to the left.
Make sure that you also include any cents that are being paid as well. If there are no cents, you can write an even number or include a decimal followed by two zeros (i.e., $55.00) to indicate this.
In my opinion, the more accurate the number is, the better.
This is probably one of the least important lines of a Canadian cheque. This allows you to write a brief memo about what the cheque is for.
It’s more important for personal accounting than it is for the bank. Most banks won’t have a problem if the memo line is blank.
That being said, I always recommend filling it out if you’re writing a cheque to somebody.
If you received a cheque from an individual with a blank memo line, then it’s still a good idea for you to write what it was for, so that you can keep a record of it.
Memos don’t need to be overly descriptive. A good memo is straight and to the point. Some examples of a good cheque memo include:
- “Holiday gift”
- “Payment for invoice #123”
- “Payroll cheque 9-9-2022 for 35 hours”
- “Rent for unit 1A”
If you’re writing a cheque to an individual or business, you should also flip to the back pages of your chequebook and write the same memo.
This will help you with your accounting at the end of the year, so you know exactly who you paid and for what.
8. Signature Line
The signature line, typically located at the bottom right of a cheque, is where the account holder signs to authorize the cheque. It’s crucial for the cheque’s validity as the bank compares this signature with the one on file to prevent fraud.
An unsigned cheque is considered incomplete and won’t be accepted by the bank. Therefore, one should only sign a cheque when all other details are correctly filled out, ensuring the intended payment is authorized accurately. In the case of businesses, digital or printed signatures may be used, often with added security features.
9. Endorsement (Back Of Cheque)
Last but not least, you’ll find the endorsement line on the back of the cheque. It will usually be an empty line that runs perpendicularly to the text on the front of the cheque.
This line is meant to be signed by the individual who is depositing the cheque.
The individual or organization writing the cheque should NOT fill out this line.
The purpose of this line is to prove who the individual is that deposited the cheque.
If there is ever a discrepancy or an instance of fraud, the bank can compare signatures to see the individual responsible for signing the cheque (or if it was forged by a thief).
Most banks will not allow you to deposit a cheque that you, as the receiver, have not endorsed.
Here, you’re encouraged to use your personal signature to endorse the cheque.
This should match the personal signature that the bank has on file for your account and helps to prove that it was really you who deposited the cheque.
Have you ever looked at a cheque and wondered “How do you read the bottom of a Canadian cheque?” Now that you know how to read a cheque in Canada (at least the basic parts), it’s time to take a closer look at the MICR encoding line.
This numerical line, with its futuristic number script, includes important cheque identification data, including:
- The cheque number (in the order of your chequebook)
- The transit/branch number
- The designation/institution number
- The bank account number
To clarify, here’s an example of what an RBC bank cheque looks like:
Now, I’ll give you a brief explanation of each number and why they’re important.
Starting on the far left, you’ll find the cheque number. This typically ranges between 1 and 100 and represents the order of the cheque in the chequebook.
For instance, the first cheque of the book would be represented by the number 001 and the last cheque of the book would be represented by 100.
The transit number is a unique five-digit code that’s assigned to the branch where you created the account at.
For as long as you keep your account open with the bank, the transit number will remain the same. This is true even if you move to another city and start visiting another branch of the same bank.
Unless you close the account permanently and reopen another bank account, the branch number will never change.
To the right of the transit number, you’ll find the designation number. This three-digit number is unique to every banking institution in Canada.
All TD banks in Canada will have the same three-digit designation, just as all RBC bank branches in Canada will have the same three-digit institution number.
Lastly, on the far right-hand of the MICR number, you’ll find the bank account number. This is unique to every individual bank account.
While multiple individuals may have the same designation and transit numbers on their cheques, your account number is unique to you.
Understanding Cheque Fraud in Canada
Cheque fraud is a serious issue that can have significant financial impacts. In Canada, as in many countries around the world, cheque fraud is a criminal offence. It can occur in several ways:
Counterfeit cheques are created by criminals who use sophisticated technology to make the cheques look legitimate. They can be printed with the account and routing numbers of real accounts. The criminals then use these counterfeit cheques to pay for goods or services.
Forgery can happen when someone alters a legitimate cheque, changing the name of the payee or the amount of the cheque without the account holder’s knowledge or consent.
Criminals can steal legitimate cheques, often from mailboxes, and then alter them to make them payable to themselves. They can also use the account information on those cheques to create counterfeit cheques.
This happens when someone finds a cheque made out to another person and then forges that person’s signature to cash the cheque or deposit it into their own account.
How to Protect Yourself
The Canadian Anti-Fraud Centre provides several tips to help individuals and businesses protect themselves from cheque fraud:
- Keep your cheques safe: Always store your cheques, both blank and cancelled, in a safe and secure location.
- Examine cheques closely: If you’re accepting a cheque, look at it closely. Make sure the cheque number and bank account number match, the cheque has a legitimate bank name, and the cheque amount and written amount match.
- Monitor your accounts: Keep a close eye on your bank accounts.
Whether you’re writing a cheque to pay a bill, receiving a written cheque from an employer, or just want to know how to find your account number on your cheque, you should have a complete understanding of how to read a cheque in Canada.
If you’re looking for a more detailed guide on how to write a cheque in Canada, keep reading here!