Pay To Order

AAA

DEFINITION of 'Pay To Order'

A check or draft that must be paid via endorsement and delivery. Pay-to-order instruments are negotiable checks or drafts that are generally written as "pay to X or order." These instruments stand in contrast to pay-to-bearer instruments, which do not require endorsement.

INVESTOPEDIA EXPLAINS 'Pay To Order'

The Uniform Commercial Code outlines the rules pertaining to pay-to-order instruments. It specifies that ownership of this type of check can be transferred only via endorsement – someone who accepts a check must endorse it before transferring it somewhere else.

RELATED TERMS
  1. Make To Stock - MTS

    A traditional production strategy used by businesses to match ...
  2. Pay To Bearer

    Any check or draft that can be transferred to the holder by delivery ...
  3. Acceptance

    A contractual agreement on a time draft or sight draft to pay ...
  4. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  5. Endorsement

    1. A legal term that refers to the signing of a document which ...
  6. Bounced Check

    A slang word for a check that cannot be processed because the ...
RELATED FAQS
  1. Are all bank accounts insured by the FDIC?

    The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects you against ... Read Full Answer >>
  2. What are some of the well-known no-load funds?

    The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted ... Read Full Answer >>
  3. Why do long-term care insurers require the loss of two Activities of Daily Living ...

    A merchant would use a banker's acceptance for several reasons, particularly when engaged in international trade. One of ... Read Full Answer >>
  4. How do you calculate payback period using Excel?

    Each financial institution offers similar products for its banking customers, including savings accounts, certificates of ... Read Full Answer >>
  5. What formula can I use to calculate interest on interest?

    Use the compound interest formula to determine the amount of accumulated interest on the principal amount invested or borrowed. ... Read Full Answer >>
  6. Are money market accounts for short-term investments a good idea?

    Money market accounts are a good idea for short-term investments. Some of the desired traits in short-term investments are ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Demystification Of Bank Accounts

    Find out which type of account suits your specific needs.
  2. Budgeting

    When Good People Write Bad Checks

    Overdraft protection can help when you overestimate your balance, but it will cost you.
  3. Savings

    Top Premium Checking Accounts of 2015

    Which banks offer the best deals for premium checking accounts – and what do you have to do to qualify for one?
  4. Economics

    Explaining Risk-Weighted Assets

    Risk-weighted assets is a banking term that refers to a method of measuring the risk inherent in a bank’s assets, which is typically its loan portfolio.
  5. Economics

    Understanding Term Loans

    A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate.
  6. Savings

    Understanding Savings Accounts

    A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
  7. Personal Finance

    How The SWIFT System Works

    SWIFT has become the global standard for processing instructions and messages for payment and securities trade transactions. Investopedia explains what SWIFT is, how it works, how it makes money, ...
  8. Savings

    Review: Discover Checking Account

    Will having a Discover checking account save you money? It will save you fees.
  9. Economics

    Explaining the Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment banking business.
  10. Credit & Loans

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.

You May Also Like

Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  3. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  4. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  5. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
  6. Risk Premium

    The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is ...
Trading Center