A bank draft is a check from a bank drawn on the account it maintains with another bank, payable to the order of a specific payee, for a specific sum of money and payable on demand. It is a check that is guaranteed by a bank.
It is treated like cash so that it clears almost instantly, making bank drafts useful when it comes to transactions involving huge sums of money. Purchasing with a bank draft allows a person to buy an item without having to bring cash, but it also assures the seller that the buyer has sufficient funds in the bank to cover the amount.
Due to the proliferation of ATM cards and debit cards, the use of bank drafts have been lessened, since people can now use their debit cards to purchase items by entering their personal identification number (PIN). Bank drafts do continue to be used for larger transactions, for transactions between two individuals and also in stores that have no facilities for card transactions.
Recently the reputation of bank drafts has taken a hit due to scams involving fake bank drafts. Technological advancements in printing have enabled scammers to print realistic bank drafts, fooling even banks into accepting bogus checks before realizing a few days later that it is actual a fake. Scams involving checks are especially popular on online buy and sell sites.
