What Is an On-Us Item?
Let me explain what an on-us item is. It's a check or draft that you present to the bank where the check writer has their funds deposited, rather than the depositor's bank—though sometimes both parties use the same bank. You can then cash it or deposit it into another account.
Of course, the drawing account needs a sufficient balance to cover the check.
Key Takeaways
An on-us item is a check or payment that gets deposited or processed by the same bank that issued or initiated it. Since the transaction stays within one bank, it's preferred because it involves lower expenses and gives the bank a chance to profit from it.
For not-on-us items, you have to use an inter-bank payments or clearing network, which often comes with fees and charges.
Understanding On-Us Items
On-us items can be quite beneficial for the banks handling them, as they often earn revenues from both the acquiring and issuing sides of the payment. In these transactions, there's usually no need to involve an outside network for authorization or funds transfer, which avoids extra fees or surcharges. You might also hear on-us checks called 'house checks.'
These items aren't limited to paper checks; they can also be electronic debits or transfers. Just like with checks, electronic on-us items involve drawing and paying accounts at the same bank.
If the bank of first deposit is the same as the issuer's bank, you don't need services from a private clearinghouse or any third-party entity.
On-Us Versus Other Forms of Transactions
Besides on-us items, there are several other categories of bank transactions. These include not-on-us transactions, international or cross-border transactions, and intra-regional transactions. A not-on-us item happens when the acquirer and issuer banks are different. For instance, in a typical credit card process, the acquirer's bank— that's the merchant's bank—processes and settles the transaction. After swiping the card, the merchant's bank requests authorization from the card-issuing bank before completing the sale.
International or cross-border transactions occur when the acquirer and issuer are from different countries. Intra-regional transactions involve acquirers and issuers from different regions but within an established geographic group, like the Europe Single Euro Payments Area (SEPA) or GIM UEMOA, which is a banking group for the Economic and Monetary Union of West Africa. GIM UEMOA covers over eighty regional financial institutions and more than 80 million individuals.
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