Payorder/Banker’s Cheque

The uncertainty associated with cheque payments makes the mode unacceptable to some entities, such as government departments and institutions . A payorder or the Banker’s cheque is a cheque issued by a bank on itself. Both drawer and drawee is the same bank.

A bank issues a PO after receipt of the money from the applicant. Hence it is certain to be paid because no bank can afford to default on its promise to pay for fear of losing the trust of the public. Bank collects a fee for issuing PO.