What is a restrictive endorsement on a check?

Errors in naming the new payee or mismatches in signatures can lead to transactional hiccups, sometimes necessitating reissuance or additional bank visits. A restrictive endorsement is a type of endorsement on a check that limits or restricts how the funds can be used or negotiated.

What is a restrictive endorsement stamp?

A restrictive endorsement stamp is a rubber stamp that is imprinted with a “For Deposit Only” message. It is applied to the back of a check, and is used to keep someone from intercepting the check and using it to pay a third party. This stamp effectively limits further action on the check by the stated payee to only being able to deposit it.

What is a restricted endorsement?

However, a restricted endorsement ensures safety in payments through checks and other financial instruments. Such a conditional instrument becomes non-negotiable to a certain extent. Thus, the endorsee cannot transfer it to their creditors or encash it immediately in an emergency.