Acceptor

The acceptor is the third party who accepts responsibility for payment in a bill of exchange. The bill of exchange will generally have three parties: the drawor, the drawee and the acceptor.

A simple example of an acceptor is a bank who accepts a check drawn against it and assumes responsibility for its payment. Company XYZ has paid Electric Company ABC through a check drawn against Bank DEF. When Electric Company ABC presents the check for payment, and the bank agrees to pay the check, it becomes the acceptor.

Acceptor and Other Commercial Banking Services

In addition to taking responsibility for checks, most commercial banks offer a wide range of services to its customers (both individuals or retail customers, along with enterprise or business customers). Commercial banks accept deposits, offer a suite of checking account services, and make business, personal and mortgage loans. With a residential mortgage loan, for example, a home buyer will pledge his house to a bank. The bank then has a claim on the house in the event that the home buyer defaults on making regular mortgage payments. The bank may evict the tenant(s) and sell the house In the case of a foreclosure,

In addition commercial banks offer basic financial products like certificates of deposit (CDs) and savings accounts. These are distinct from some more complex financial products that investment banks or asset managers sell, such as derivative securities.

When a commercial bank lends money to a customer, it charges a rate of interest that is higher than what the bank pays its depositors. This spread, known as net interest income, is how commercial banks generate revenues, along with charging additional service fees.

Acceptor, Commercial Banks, and Capital Requirements

Depository institutions have capital requirements, which regulatory agencies, such as the Bank for International Settlements, the Federal Deposit Insurance Corporation or the Federal Reserve Board set in place. These capital requirements ensure that banks have enough capital to honor withdrawals if they sustain operating losses. Adhering to capital requirements ensures that a bank will be able to act as an acceptor, taking responsibility for checks customers present.

The 2008 global financial crisis precipitated the passing of the Dodd-Frank Act of 2010, which ensured the largest U.S. banks would maintain enough capital to withstand systematic shocks and not default. A default of several major commercial banks could cause catastrophe for retail customers and higher net worth customers alike.