Also known as bank-guaranteed checks, bank checks are checks which are issued by a drawee (a bank) on behalf of a drawer (a bank customer). The money represented by the check is taken out of the customer’s account by the bank and held in escrow until the check is cashed or deposited by the payee (the check's recipient). In this way, the bank guarantees that the check’s recipient will receive the money due. Because of this, bank checks provide a similar level of security as direct cash payments.
Unlike personal checks, bank checks have a face value. You specify the face value when you order the check. The face value is equal to the amount withheld from your account.
Only the payee whom you list as recipient is able to cash a bank check. Depending on the recipient’s bank, the amount drawn using the check can either be received as a deposit into the recipient’s banks account, or received as cash at the till.
While most Swiss banks charge high fees to issue bank checks (as much as 50 francs per check!), most do not charge a fee to cash their own bank checks. Fees for cashing bank checks at third-party banks, on the other hand, can be fairly high (between 10 and 30 Swiss francs, depending on the bank).
Example: You order a bank check with a face value of 1000 francs from your bank in order to pay for a private purchase by mail. The bank debits 1000 francs from your account and sends you the check. You write out the check to an individual or business and give it or post it to them. The recipient then goes to the bank that issued the check, or to a third-party bank, and exchanges the check for cash or for a deposit into their account.
More on this topic:
Guide to using checks in Switzerland
