Checks have never been widely used in Switzerland, largely due to the Swiss preference for cash. Switzerland’s low crime rates and efficient banking and money transfer systems mean that many of the benefits which are typically associated with using checks do not deliver real value. However, there are situations in which using checks can make sense, and many Swiss banks issue checks and cash checks on behalf of their customers.
Checks are one of the few secure tools for making direct transfers of funds to recipients whose bank details are not known to you. Unlike bank transfers which require you to know recipient’s bank account information, the only information which you need to write a check is the recipient’s name and in some case their address. The reason for this is that a check is not a bank transfer order, but a direct debit order which gives its holder the right to draw money directly out of your account.
Checks provide a secure alternative to cash for non-electronic transactions because only the stated recipient can cash a check. If a thief were to steal a check, they would not be able to cash it. Checks also provide a secure means of making payments via mail because they can be posted to recipients who can then use them to draw the stated amount of money from your account.
Bank checks – checks which are drawn on the drawer’s bank rather than on their bank account (like personal checks), guarantee that the payee can cash the check at its face value. In this way they serve a similar function to cash, while limiting their use to a single recipient. For this reason, bank checks issued by major Swiss banks are widely accepted worldwide.
Another benefit of checks is that, by post-dating (specifying a future date from which the check can be cashed), you can insure that the check is only cashed at a time of your choosing. If the money for transactions will only be available in your account at the end of the month, for example, you can specify that date on checks you write so that they can only be cashed by recipients after that date. This is also useful when, for example, you are paying for services which have not yet been provided. If the check recipient does not provide the services as specified, you can cancel the check and prevent them from drawing the payment. In this way, post-dated checks, or deferred checks are sometimes used as a forward transaction trading instrument, with two parties agreeing to a transaction which can only be performed at a later date.
Cash checks made out to yourself can also be used to draw money from your own bank accounts while traveling. For large amounts of money, this can work out cheaper and more efficient than making multiple ATM withdrawals with a debit card or credit card. If you reside in one country but want to transfer money from a bank account you hold in a different country, writing yourself a check drawn on your foreign account provides an alternative to performing a bank wire transfer. This is useful in countries which require you to make large wire transfer orders in person rather than remotely (online, by phone or by mail) because when you cash a check you are making a withdrawal and not a transfer.
Using checks in Switzerland
When you cash a check, the bank normally fronts the money and deposits it into your account immediately. However, after paying you the money, it takes the bank some time to clear the check. If your bank cannot clear the check, the check will “bounce”, meaning the money will be debited back out of your account by your bank because the check was not valid. If you have withdrawn the money from your account in the meantime and do not have sufficient assets in your account, you will owe the bank the money.
In Switzerland, checks cashed at the same bank which issues them are usually cleared on the same day, but those issued by other Swiss banks take around 2 days to clear. Checks drawn from banks outside of Switzerland may take 5 to 10 business days to clear.
If you only accept bank checks issued by Swiss banks, the clearing period will not likely pose a problem. If you accept personal checks or checks issued by overseas banks, you should be aware that there is a risk of checks bouncing. For this reason, it is better not to count transactions as complete until checks have been cleared. If you cash checks at you bank, ask your bank representative how long it will take for each check to clear.
You should also be wary of accepting personal checks as immediate payment against goods or services from people who you do not know or trust. Bank checks provide a much safer (and cheaper) option for accepting checks as payment in place of cash.
Using checks in Switzerland
Most large Swiss banks issue bank checks and will also cash both bank checks and personal checks. As a general rule, Swiss banks only cash or deposit checks for customers who hold accounts with them. If you frequently make use of checks, or are interested in using them, make sure to choose a Swiss Bank which issues and cashes checks as a service.
Swiss banks which issue, deposit and cash both bank checks and personal checks for their customers include Credit Suisse, UBS, Raiffeisen banks, Bank Cler, larger cantonal banks (including the Zürcher Kantonalbank) and many regional banks. Migros Bank issues bank checks, but not personal checks – although customers can cash personal checks from Swiss banks.
Sadly, due to the limited use of checks in Switzerland, services like cashing checks via mobile, unsolicited cash checks, free checks provided with checking accounts, cashing checks at convenience stores and depositing checks into prepaid card accounts are virtually unheard of.
The cost of using checks in Switzerland
Comparing check fees and charges before choosing an account is also important. Depending on the kind of transactions you make, using checks in Switzerland can be quite costly compared to using other instruments. While banks in many other countries provide checks to their customers either for free or at a very low cost, most Swiss banks charge you very high fees when they issue checks on your behalf.
Personal checks from Swiss banks cost between 5 and 20 francs per check, depending on the bank. Bank checks are more expensive, with most Swiss banks charging 50 francs per bank check issued. For these reasons, using checks issued by Swiss banks only makes sense when no cheaper option can be used for a transaction.
Fees charged by Swiss banks for cashing checks, on the other hand, compare favorably with those of other transaction types – especially in the case of bank checks and large international transactions. Bank checks in Swiss francs can generally be cashed instantly at no fee by the Swiss bank which issued them. On the other hand, you may pay fees of up to 10 francs per check when you cash personal checks or foreign currency bank checks at the same Swiss bank which issued them. Swiss banks charge anywhere from 10 francs to 30 francs per check to cash checks issued by other Swiss banks.
Checks drawn on foreign banks typically command the same fee as those drawn on other Swiss banks. However, you also pay an additional foreign transaction fee equal to a percentage of the transaction (between 1% to 2.5% of the transacted amount). Some banks charge a minimum foreign transaction fee. It is also important to pay attention to the currency exchange spreads used by banks before cashing foreign currency checks, as these can add a significant cost. When cashing foreign checks, you can avoid the foreign transaction fee by depositing the check into an account which uses the same currency that the check is issued in. For example, cashing a U.S. dollar check into a U.S. dollar account at a Swiss bank can help you bypass currency exchange spreads and foreign transaction fees.
Cancelling checks (invalidating checks before they are drawn on) is expensive. Most Swiss banks charge a 50-franc fee per bank check or personal check cancelled. Some (UBS, for example) charge as much as 100 francs to cancel bank checks.
Checks fill a niche gap in banking services which is not currently filled by other services. However, the fees charged by Swiss banks for issuing and cashing checks mean that there are very few scenarios in which using checks is the most affordable option for financial transactions. Making large international transactions for which the wire transfers fees would be more expensive than the combined check issuing and cashing fees is one possible scenario in which using checks could make sense. Using checks can also make sense when a great deal of flexibility – such as the ability to post-date a transaction – is required. They can also serve as a last resort when no alternative method of payment is available (in countries with poor infrastructure, for example).
Bank transfers from one bank account to another are, in almost every case, the most affordable way to transfer money without transporting cash. Swiss banks normally do not charge for transfers within Switzerland and the fees charged for SEPA transfers to euro-zone countries are low. Transfers to other countries in which IBANs are used are also relatively affordable. Selecting the “individual profile” option in the moneyland.ch private account comparison tool lets you specify the types and amounts of transactions you expect to make and find the most affordable accounts for your needs. Peer to peer transfers provide another alternative for international transactions.