But before we begin, we must know what a bank draft is. Well, a bank draft is a payment that is given on behalf of a payer that is being guaranteed by the issuing bank. The draft actually ensures that the payee is having a secure form of the payment. Just like a cashier’s check, a bank draft is safer than a personal check when accepting large payments. And to get a bank draft, a bank customer must have his funds or the cash available, and then the bank will freeze of keep those funds in the bank’s own account until the payment is complete. The banks are able to guarantee the bank drafts as the customer has already paid the amount.
There is also a term known as the basic bank draft. This is actually a traditional way of bank draft and is a form of payment used when the safety is given the utmost importance. There are large amounts and sometimes the transaction amounts are high, the consequences of a bounce or a returned check is very significant. It is always a risk to send the expensive goods or even a complete amount of deal when there is also an uncertainty about a successful payment. But a bank draft then becomes the safest option to make those high amount payments much more likely to go through. However, purchasing bank drafts is one of the best ways to invest in today’s time.
The term bank draft can also be referred to as automatic electronic payments. These are the payments that allow a business or even a service provider to transfer their funds directly out of the customer checking accounts. Hence, instead of writing a check or paying with plastic, the customers provide the bank account information like the account number, routing numbers etc., to the business to set up the draft payments electronically.