I cannot wrap my head around the security of Cheques. They have been around since forever (and I still don’t get how they got verified, although I can understand that fraud could have been way higher back then).
Is there a unified standard for them? Or a proof that it is valid from the government?
In: Economics
When you hand a cheque over to a bank they can ring up the original bank and ask whether the cheque matches an account there. In practice this is rarely done (but could be for very large cheques).
Crucially, the cheque has to clear before the money is legally yours. This means that the money has to be transferred out of the account of the person who issued the cheque and into your account. Now banks can choose (or in some jurisdictions are obliged) to make the money available to you before the cheque clears, but they will take it back if it turns out there wasn’t enough cash in the issuing account to transfer over to you. This is a risk for the bank if you take all the cash out of your account beforehand.
The risk of large scale fraud is low because the cheque is a physical object, and because you often need to physically take it to a branch. It is much easier to scale up electronic fraud which is also more anonymous and so less risky for the fraudster. That said, cheques are being phased out in part because they are risky in this way.
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