Bank Draft vs Certified Cheque Head to Head Difference

Difference between Bank Draft vs Certified Cheque

Basis – Bank Draft vs Certified Cheque		Bank Draft		Certified Cheque
Key difference		Bank drafts are issued by banks and are guaranteed		Cheques are issued by customers and are not guaranteed however a certified cheque is similar except that the bank employee verifies if the fund is available to make a payment keeps that amount aside and then signs or certifies that the amount is available
Meaning		A bank draft is a payment instrument that is issued by the bank on request of the payer		Certified Cheque is a payment instrument that allows business and individuals to settle transactions. This facility is provided by the bank where the drawer’s account is present
Issuer		A bank draft is issued by the bank on request from its customers. Bank directly makes transfers to the bank account which may be in the same bank or another bank		The certified cheque is issued by a customer who holds an account in the bank and orders the bank to make a payment to the specified person or to the bearer of the cheque
Signature		Bank Draft does not require customers signature. However, there is a certified bank draft which is signed by the bank official which makes it more secure		Certified cheque requires customers signature. Also, a bank certifies a cheque by adding the word ‘Certified’ to the signature
Process		1. In case of a bank draft, there are banks representatives who act as an intermediary.2. Bank issues draft on your request but processes it only after verifying that the account has sufficient funds to cover the cheque.3. At this point, the bank deducts the amount from your bank account.The process is complete once the recipient deposits or cashes the draft		1. In the case of certified cheque, there is also an intermediary involved which is the bank employee2. The bank employee checks if the issuer has sufficient funds in the account3. After it is confirmed the employee processes it. The amount is deducted after the employee certifies it
Stop Payment		The possible way to stop payment for a bank draft is when it is lost or destroyed. The bank may provide with a replace issue draft instead		A certified cheque guarantees payment will be made this means it is not possible to stop payment after the certified cheque is issued
Security		Banks charge a lower fee for bank draft in comparison to certified cheque		The certified cheque is guaranteed and banks charge a higher fee to issue it
Particulars		Date, the amount payable, payees name		Date, name, the amount in words and figures, signature