The purchaser also receives a receipt and other documentation that should be kept in a safe place other than where they carry the cheques.

Find sources: Travellers cheque news newspapers books scholar JSTOR ( August 2007 ) ( Learn how and when to remove this template message ).

They can be denominated in one of a number of major world currencies and are preprinted, fixed-amount cheques designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.

The incentive for merchants and other parties to accept them lies in the fact that as long as the original signature (which the buyer is supposed to place on the cheque in ink as soon as they receive the cheque) and the signature made at the time the cheque is used are the same, the cheques issuer will unconditionally guarantee payment of the face amount even if the cheque was fraudulently issued, stolen, or lost.

This means that a travellers cheque can never bounce unless the issuer goes bankrupt and out of business.

If a travellers cheque were lost or stolen, it could be replaced by the issuing financial institution.

In addition, they can earn interest for the period that the cheques are uncashed, while not paying any interest to the cheque holder, making them effectively interest-free loans.

In addition, the setup cost and the cost of issuing and processing travellers cheques is much higher than for credit card transactions.

The cheque issuer carries the exchange rate risk, and normally pays a fee to hedge against the risk.

Travellers cheques are no longer widely accepted and cannot easily be cashed, even at the banks that issued them.

The alternatives to travellers cheques are generally cheaper and more flexible.

Travel money cards, for instance, provide features similar to travelers cheques but offer greater ease and flexibility.

The organization that produces a travellers cheque is the obligor or issuer.

The bank or other place that sells it is the agent of the issuer.

The entity to whom the purchaser hands the cheque in payment for goods or services is the payee or merchant.

American Expresss introduction of travellers cheques is traditionally attributed to employee Marcellus Flemming Berry, after company president J.

C. Fargo had problems in smaller European cities obtaining funds with a letter of credit.

In addition, security concerns of retailers has led to many businesses ceasing to accept them, in turn making them less attractive to travellers.

This has led to complaints about the difficulty that holders have in using them.

In much of Europe and Asia, travellers cheques are no longer widely accepted and cannot be easily cashed, even at the banks that issued them.

The sustained decline in interest rates in most of the developed world since the early-to-mid 1990s has substantially reduced the profitability of travellers cheques for their issuers.

Financial institutions have responded to this development by charging new fees for travellers cheques, increasing existing fees, or by exiting the business altogether.

Upon obtaining custody of a purchased supply of travellers cheques, the purchaser immediately signs each cheque.

American Express Cheque Payable