BTEC Business Level 3 Practice Test

The primary purpose of a cheque is to authorize a transfer of funds from one bank account to another. When an individual writes a cheque, they are giving permission to their bank to withdraw a specified amount of money from their account and transfer it to the payee’s bank account. This method of payment is useful for both the payer and recipient, providing a clear record of the transaction.

The process of using a cheque involves the payee presenting it to their bank, which facilitates the transfer based on the payer's account balance. This makes cheques a secure and formal way to settle debts or make payments. The system relies on trust and established banking protocols, ensuring that cheques can be processed reliably and accurately.

In contrast, alternatives like touching a payment terminal do not utilize cheques but rely on electronic payments. Loans against a bank account involve borrowing money, and while savings accounts offer access to funds, they do not pertain to the purpose of a cheque.