A bank draft is a written request for payment that the bank issues to a company. It names the bank as the entity making the payment and is guaranteed to be paid in most cases. It can be used for purchases and is usually signed by a manager at the company. The payor must have the funds required to make the payment before the bank can process the draft.
Bank drafts are used to pay bills and make large purchases. They're similar to cashier's checks, but they're considered safer. The bank that issues the draft guarantees payment and can be used when the payee wants an extremely secure payment method. Bank drafts are also useful for transferring large amounts of money.
Certified cheques are issued by a bank and are similar to bank drafts, but have additional security benefits. A certified cheque requires a signature, while a bank draft does not. The only difference is the signature requirement. Bank drafts are issued by a bank and the recipient of the draft must be in the same account as the payer. The bank must make sure that the person receiving the draft has enough money to cover the amount of money written on the cheque.
Bank drafts have one major disadvantage: they can't be canceled once they're delivered. A bank draft buyer must provide a surety bond or indemnity. In some cases, the bank will replace lost or stolen drafts. A bank draft can only be purchased at a bank and not at a certified store.
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