What is a cash letter?

A cash letter is defined as a bundle of checks sent for deposit or collection from a bank. This term is commonly used in the banking and payments industry to describe the physical or electronic transmission of a group of checks to a clearing house or bank for processing. When financial institutions receive cash letters, they can efficiently manage the clearing and settlement of checks between different banks, facilitating faster transactions for customers.

In this context, it's essential to understand the significance of cash letters in the payment process. They serve as a consolidated method for transferring multiple checks, thereby streamlining operations and reducing the volume of individual transactions that banks must process separately. This is especially important in high-volume environments or where multiple deposits are made regularly.

The other options, while related to various aspects of cash management and banking, do not accurately define what a cash letter is in the context of payments processing. Thus, the correct identification of cash letters as bundles of checks plays a crucial role in understanding how payments are efficiently handled.