Bank Draft

In the banking field there are many types of payments , including negotiable titles which are signed documents that ensure the payment of a certain amount of money, are transferable and signed documents that are given to a specific beneficiary. One of the best known negotiable securities is known as a bank draft , a payment method that is made by means of a bank check issued by the bank.

What is a bank draft?

The bank draft or bank check is a document by means of which a person can send a certain amount of money to another by means of a check that is specifically issued by the issuing bank .

  • Characteristics of the bank transfer
  • Source
  • History
  • What is the bank draft for?
  • How does it work
  • How long it takes
  • Advantage
  • Disadvantages
  • Importance
  • Bank draft example

Characteristics of the bank transfer

Some of the main characteristics of bank drafts are mentioned below:

  • The document must include the name of the bank that makes the document.
  • You can see the amount of money that will be sent to another person.
  • You must have the identity of the person who sends the money and who receives it.
  • They may have threads , special inks or watermarks to ensure and increase security.
  • It has to be done in actual form in banks.
  • It is a mechanism widely used to perform operations of an international character .
  • They are also called cashier’s checks, cashier’s checks , or cashier’s checks .
  • Bank drafts can be of three types:
    • Crossed : in the document there are two lines between the name of the person who collects the money and the name of the bank.
    • Commercial : they are issued by companies to pay for operations of a commercial nature.
    • International : they are checks issued abroad to be issued in the national currency of the person receiving the money order.


The origin of the bank draft goes hand in hand with the origin of checks , and, although it may be believed that its origin is modern, the truth is that it originated in Egypt during the 4th century BC . when check payments began to be accepted at the Central Bank of Alexandria .


The bank transfer system as such begins its history in northern Italy with ” Bancherii “, which was a financial center . At that time, what was practiced was an operation in which the moneychangers received customers and provided them a service which they could keep their money and make a transfer so directly to another person by checking books storage. Then, they would open the book, withdraw the amount of money and then open another book where they put the amount.

In the middle of the 20th century , almost all European countries had a money order service and the first postdraft originated in Austria . Over time, banking institutions succeeded in adopting this type of direct payment from the sender to the receiver of the money.

What is the bank draft for?

In most cases, bank drafts can be used as a means of payment in most currencies . The person who receives the bank draft can deposit it in any bank, just as if it were cash. They are used mainly when the client needs to make a transaction related to import or export and therefore needs to make payments of large amounts of money .

How does it work

First, the person making the payment requests a bank draft from their financial institution. After submitting the request, the bank examines the person’s account to see if they have sufficient funds to be able to make the transfer. When the interested party has sufficient funds, the bank authorizes the request , withdraws the funds from the user’s account and proceeds to issue a bank draft for an equivalent amount. The funds that are withdrawn from the account are generally transferred to the bank’s reserve account until the moment thebeneficiary present the draft for payment.

This type of money order is issued in the form of a document and is drawn in the name of the person who is going to deposit it and receive the money. When the beneficiary presents the bank draft for payment, their identity must first be verified with the name that appears on the bank draft and then the funds may be deposited into the beneficiary’s account.

How long it takes

This process can take between 1 and 4 business days to process.


Among the main advantages that exist with this type of payment method are mentioned below:

  • It is considered a safe and reliable way through which money can be sent to other countries.
  • The bank is the one that backs the check and for this reason, the bank draft never “bounces”.
  • It can be exchanged in the country with the official currency , which makes the necessary procedures at the time of changing them less.
  • It is much cheaper than other means of payment.
  • They are an important option for international companies as it is a simple way to send and receive money.


As it has several advantages, there may also be some disadvantages or disadvantages among which are:

  • One of the main disadvantages is time, since this type of banking operation must be carried out specifically in the banking institution , which means that the client has to travel to the place to be able to do it.
  • They can last from a couple of days to weeks , which is quite uncomfortable and disadvantageous.
  • The bank draft cannot be collected directly and therefore, the client who receives the money must necessarily have a bank account in the bank where the money will be withdrawn.


The main importance of the bank transfer is that it is one of the most efficient and secure methods to be able to send money abroad , guaranteeing that the money, in most cases, can reach its destination quickly. In addition, it is a type of transaction that is one hundred percent backed by the financial institution that carries out the transaction, so the money is well insured. It represents one of the best payment methods mainly for companies that work internationally as a simple mechanism to send and receive money.

Bank draft example

An example of a bank draft is as follows:

BANK                                 DRAFT AMOUNT$
Place __________________________________ Date ____________________4 


Issuing account number ______________


Receiving account number _____________


Pay to the order of _______________________________________________________


The sum of _______________________________________________________________

Amount in letters



_______________________________ ______________________________

Manager’s Signature Place of payment

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