A bank draft is a payment instrument that is issued by the bank at the request of the payer. The drawer is the bank writing out the bank draft, the drawee is the bank’s customer who is requesting the draft to make a payment and the payee is the party that receives payment. A bank draft does not require a signature and, therefore, maybe open to fraud. Certified bank drafts, on the other hand, are bank drafts that are signed and certified by a bank official which makes the draft more secure.
A bank draft guarantees payment as the bank ensures that sufficient funds are held in the drawee’s account to make the required payment before the bank draft is issued.