A payee of a check is the person or business to whom the check is made out and who will receive funds. A payee can also receive funds in other ways, including credit card payments, bank transfers, direct deposit, and electronic payments. Here’s a closer look at what a payee is, how a payee differs from a payor, and where to find the payee’s name on a check.
Key Points
• A payee is the individual or business designated to receive funds from a check, clearly indicated on the payee line of the document.
• The payor, or payer, is the person writing the check, and they can also be the payee if they write a check to themselves.
• Payees can receive payments through various methods including cash, credit cards, electronic transfers, and mobile payments, each with distinct advantages.
• Identifying the payee on a check is straightforward, as it appears at the top where it states “pay to the order of.”
• To avoid fraud, individuals should handle checks securely by using a pen, verifying information, and avoiding mailing checks whenever possible.
What Is a Payee?
The payee is the individual who receives the payment. When a payment is made via a check, their name is written on the payee, or “Pay To The Order Of,” line.
A paper check is a form of payment that transfers money from one bank account to another. For a check to be valid, it has to have the recipient’s name (aka the payee), payment amount, and date written on it clearly. While checks aren’t used as much as they used to be, they can still be a convenient way to make a payment or to give someone a gift. They are also considered to be fairly secure forms of payment as only the person named on the check, or payee, can cash the check.
It’s also possible to make a payment via an electronic check, or eCheck. This is a digital version of a traditional paper check, where funds are transferred electronically from your bank account to another person’s bank account through the Automated Clearing House (ACH) network. An eCheck allows you to make a payment online using your checking account, and also involves designing a payee.
Payee vs Payor: What’s the Difference?
Payee and payor sound similar but there is a key difference:
• The payee is the party receiving the payment when someone writes a check.
• The payor is the party who is making the payment. It’s also common to hear the payor referred to as the payer.
It is possible for the payor and the payee to be the same person. An individual can pay themselves via a check by writing their own name on the payee line. This is commonly done when transferring funds from one account to another or from one bank where the individual has an account to a second bank they have an account at.
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Ways That Payees Can Receive Money
While the term payee often means the recipient of a check, a check is not the only way a person or business can be paid. Payees can also receive funds by a variety of different payment methods, such as:
• Cash: Yes, dollar bills (and other denominations) still have a place around the world.
• Credit card: You can swipe, insert, or tap your way to pay for goods or services.
• Cashier’s check or certified check: These are secure forms of payment with additional assurances beyond a standard check.
• Money order: These are available for purchase at U.S. post offices and via services like Western Union.
• Electronic transfer: Examples of this include when your paycheck is put into your checking account by direct deposit
• Mobile wallet payment: Say you have dinner with a friend, but you pay for it and your friend pays you back via Apple Pay or a similar app. That’s an example of a mobile payment in action.
All of these payment formats have different advantages and disadvantages. So it’s important to research all options individually to see which one is the most convenient, costs the least, and is the most secure. Sometimes you aren’t given a choice about how to make a payment (such as a landlord having a specific preference for how they want to receive rent payments), but many individuals and vendors accept a handful of different payment methods.
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How to Identify a Payee on a Check
Figuring out who a payee on a check is isn’t hard, especially since all checks follow the same format. If someone is reading a check and wants to know who the payee is, all they have to do is look at the top of the check where it says “Pay To The Order Of.” This part of a check is known as the payee line, and it designates who can cash the check.
The payee can be an individual or a business. When filling out a check, it’s important to write the individual’s or business’s full name (so if it’s Jane Smith Brown, don’t write J.S. Brown). The payee’s name must be spelled correctly, or they may not be able to cash the check.
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Tips for Handling a Check Safely
Fraud can happen with a variety of payment formats, including checks. When making a payment via check, it’s important to keep security top of mind to help avoid check fraud (which is notoriously difficult to resolve). These are some tips that can help consumers handle checks safely:
• Fill out the check using a pen so the payee’s name and the payment amount can’t be changed.
• Double-check that the payee’s name and the payment amount are correct.
• Print clearly when filling out a check; cursive writing can lead to processing mistakes.
• Don’t sign a blank check — ever. If you do, there’s the risk that a thief or the payee could fill in whatever amount they want.
• If possible, don’t send checks by mail since there is a risk they can be lost or stolen. This is especially important for checks for a large amount of money.
• If you must mail a check, try to use security envelopes, which are the kind that aren’t see-through, so a potential thief can’t tell there is a check inside.
• When mailing a check, it’s generally safer to mail it via the post office, versus leaving it in a residential mailbox to be picked up.
• If you are concerned about making a mistake when sending a check, you can always choose to do an ACH payment instead. When transferring money via ACH, you may be able to reverse the payment if you make a mistake.
And what if you are receiving a check? Follow these pointers:
• It’s important to deposit it fairly soon. Otherwise it might get misplaced and expire. Typically, checks are good for six months.
• If you’re the payee, it’s wise to only cash a check from someone you are familiar with and that is for the correct amount. It’s best not to cash a check that is for more money than is owed. Here’s why: A common form of check fraud is to give someone a check for more money than they owe and then to ask for a refund. The victim sends the refund, only to discover the check they deposited bounced, meaning they have lost money on this transaction.
• You may be able to sign the check over to someone else if you’re unable or don’t want to deposit a check. This requires signing the back of the check, then writing “Pay to the order of” and the recipient’s full name. Before you do this, however, you’ll want to make sure the recipient’s bank will accept a signed-over check.
The Takeaway
Financial terminology can sometimes be confusing. If you’re wondering who the payee of a check is, it’s simply the individual or entity that is receiving the payment. If you write a check to your landlord, then your landlord is the payee. If your employer deposits your paycheck into your bank account, then you are the payee. A payee is the opposite of a payor, or payer, which is the person or entity making the payments.
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FAQ
What are payee requests?
If someone comes across a payee request, this is usually because they are filling out a form that is requesting the proper information to pay someone. Information such as their name, address, and bank account and routing numbers may be required, depending on the chosen form of payment.
Can you get scammed by a payee?
It is possible to get scammed by a payee, which is a person or entity that receives a payment. People can request payment for goods and services and may not deliver on their promise. It’s possible for payees to commit a variety of types of fraud.
Can the payee ever be the one who sends the payment?
In most cases, the payee is not the person to send a payment but rather the recipient of funds. The payor (or payer) is the individual who makes a payment. That said, there are instances when a person might make out a check to themselves as a way to get cash through a teller or transfer funds to a different account. In this case, they are both the payee and the payor.
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