Understanding the Anatomy of a Void Cheque

The layout of a void cheque

Before diving into the process of how to read a void cheque, it's crucial to comprehend the layout first. A void cheque is not much different from a regular cheque. The only difference lies in the "VOID" inscription written across the cheque, rendering it non-cashable. Despite not being cashable, a voided cheque carries essential banking information. It has three primary sections—your bank's information, your account information, and cheque information. These sections are usually found at the bottom part of the cheque known as the 'MICR Line' (Magnetic Ink Character Recognition).

Identification of your bank's information

The first part of any cheque, be it voided or not, comprises your bank's details. This includes the bank transit number (five digits)—used to identify your specific branch amongst the numerous others, and the bank institution number (three digits)—an identification number given to every banking organization in the nation. The bank transit and institution numbers direct payments to the correct bank and branch.

Determining account information and cheque information

The third set of numbers on the void cheque is the account number. This number is unique to your account and is used by the bank to identify your specific account amongst the numerous others. The last set of numbers is the cheque number, helpful in tallying cheques and keeping a track of payments. Knowing how to identify these sections is key when learning how to read a void cheque.

Common Use Cases of a Void Cheque

Setting up direct deposit

A void cheque is commonly used for setting up direct deposit with employers. The cheque's detailed banking information allows for easy, accurate, and timely automatization of payments straight to your bank account. By providing a void cheque, employers can set you up for direct deposit and avoid the hassle of writing and giving physical cheques or worrying about late payments.

Setting up pre-authorized payments

Pre-authorized payments are automatic, pre-scheduled payments set up to be deducted from your bank account. Some may wish to set these up to pay bills, loans, or to make regular investments. A void cheque can be used to organize pre-authorized payments ensuring a consistent, timely payment pattern and aiding effective financial management.

Verification of bank account

Sometimes you may need to verify that the bank account in question indeed belongs to you. In such situations, offering a voided cheque can be an acceptable form of proof. It allows for the direct verification of your transit and bank account numbers, thus speeding up the verification process.

How to "Void" a Cheque

Implication of "VOID"

The basic principle is writing "VOID" across the face of your cheque. Once this is done, the cheque can’t be used as a regular cheque, meaning it can't be filled out and cashed or deposited. This doesn’t mean the cheque becomes useless; instead, it turns the cheque into a tool carrying your banking information. This step is essential to avoid any fraudulent activities or misuse of your cheque.

Where to write "VOID"

The most accepted method of voiding a cheque is writing "VOID" in capital letters across the front of the cheque. This should be done in such a way that you don’t obscure the numbers at the bottom of the cheque as these are vital for the relevant transactions or set-ups you will use the cheque for. Large, but not overbearing letters are generally considered best.

Alternative ways to void

In the case that physical cheques are unavailable or unnecessary, many banks offer the option to create a 'Void Cheque' document or 'Pre-Authorized Debit Form' which has the same function. These documents can be printed or may be digitally acceptable. Alternatively, talk to your bank and explore methods they might offer to void cheques or share bank information in a secure way.