Difference Between a Cheque and a Bank Draft
By Andrew Parker - March 3, 2023

A bank provides cheques and bank drafts to its clients to pay for products and services. Both of these products use monies from the bank account, and the objective is the same. However, the approach to achieving the same goal differs. So, while they may sound identical, there are some significant distinctions.

Chart Summary
  1. Issued by a customer and not guaranteed.
Guaranteed payment issued by a bank
  1. It needs to be signed by the payer
It does not require a signature
Woman paying bills on tablet

Getty images/Tetra images/JGI/Jamie Grill

Cheque vs. Bank Draft

Cheques are a service provided by the bank to consumers who have current accounts. A check is written by someone with a bank account in favor of the payee. Given the issuer’s available money, the amount is transferred from that account to the payee following the presentation. If the cheque is an order cheque, it identifies a person to whom the money should be paid, in which case the bank confirms the payee’s identification and makes the payment. A cheque is an easy form of payment, but it does not ensure payment. If the drawer’s bank account does not have enough money to pay the cheque, it is bounced or dishonored.

A bank draft is a payment instrument issued by the bank at the payer’s request. The drawer is the bank that issues the bank draft, the drawee is the bank’s client who requests the draft to make a payment, and the payee is the person who gets the amount. A bank draft assures payment since the bank ensures sufficient money is available in the drawee’s account to make the required payment before issuing the draft. A bank draft does not require a signature and is vulnerable to fraud. On the other hand, certified bank drafts are bank drafts that have been signed and certified by a bank official, increasing the security of the drafts.