[Cthulhu_]

Stupid question, but wouldn't stealing a cheque work back then? I mean I can imagine only known people would be allowed to cash it. Plus there's more benefits to carrying a cheque, large quantities get difficult to move around (same with cash money, which is one reason that higher denominations are discouraged)

[wahern]

I'm not sure if the rules were the same as far back as then, but the modern rule (or rules, plural, as they're a consequence of several rules) that a bank (either the drawee bank or an intermediate paying/depository bank, depending on the circumstances) is liable for a fraudulently cashed check has existed for centuries, IIRC. And just like today, it doesn't much matter if an impersonator forged a payee's or endorsee's signature, amount, etc; a bank is still on the hook. (And IIRC a bank is liable only upon a prima facie showing of forgery, as opposed to whatever stronger burden of proof would normally adhere.) Of course, the defrauding party is liable to which ever bank was on the hook, but the rules operate to rather clearly make a bank strictly liable in the first instance so there's minimal confusion in the banking system regarding settlements or settlement disputes, and the drawer (person who wrote the check) is the most protected of all.

This incentivizes banks to "know your customer" (long before modern regulatory regimes), as well as for banks to only deal with other reputable banks. In legal jurisdictions that do a lot of international commercial transactions, rules such as these are typically held paramount unless specifically and clearly overridden by local law. Relatedly, jurisdictions that don't abide the so-called Lex mercatoria tend not to become centers of international commerce.

If the drawer weren't strongly protected, the utility of checks would severely diminished.

[hef19898]

It sure worked. One of the reasons the value of those cheques dropped with distance to the issuer. Basically, it was a trust based system. And one that worked extremely well. With added benefits for those that figured out proper accounting around assets, liabilities and so on. The Italian bankers did, the Hanse (North German economic and trade super power made of individual merchants) did not, for example.

[kqr]

A cheque would be both easier to travel with (thus exposing yourself to less harm) but also comparatively illquid (can perhaps only be redeemed in a few locations which may not be realistically accessible to highwaymen).

[atchoo]

Interesting question. I've read books about the Templars and it didn't come up. Some speculation:

Worth bearing in mind the type of people using this service were landed gentry. A Turkish bandit wouldn't do well turning up at a Templar fortress trying to redeem some French Lordlings's gold but you still have to expect unscrupulous Europeans would be stealing from each other.

I'd expect the KYC was pretty strong at the issuers that handled gold/property. Your family would be known, not just the individual. I think they were redeeming food/lodgings/services while on route so defrauding a remote fortresses might not be at all rewarding. To score big I think you'd need to present as landed gentry at places like London which sounds hard... your target would need to have no friends/relations... but it's the premise of 1000s of historical fiction novels so eh?!

Wax seals and such were the authentication tools at the time. It might hobble attempted fakes but I would assume thieves would steal the cygnet rings and such too. I've seen claims the Templars used cyphers but that type of history gets blurred with the romantic stories. Encoding a password onto the cheque seems painfully obvious to us today.

I imagine there was a chain of custody of the person themselves. Templars were protecting the pilgrims not just their gold so they accompanied them from location to location so the chance of someone unknown turning up at a gate with cheques to cash is less likely. I also imagine they were in groups with others of similar stature with similar arrangements so the difference between an authentic wealthy traveller and a chancer might be quite vast. I imagine there was a network of letters between Templar sites tracking the notable Lords so faking your way into someone else's identity would be quite tricky.

From what I gather, it foremost may simply have been a risk based business where the vast profit covered the losses.