Certified Cheque vs Bank Draft – Which One Should You Use?

WRITTEN BY Dan Kent | UPDATED ON: May 26, 2024

Certified Cheque vs Bank Draft – Which One Should You Use

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Within the realm of monetary transactions, particularly those involving substantial sums, the need for reliable and secure payment systems is profoundly essential.

While everyday transactions often flow seamlessly with cash, credit cards, or digital transfers, larger financial dealings demand higher assurance and security. In this context, certified cheques and bank drafts step into the limelight, offering both payers and payees a sense of confidence and trust. 

This extensive article will unravel the intricacies of certified cheques and bank drafts, delving deep into their definitions, processes, benefits, and fundamental distinctions.

What is a certified cheque?

certified cheque represents a fusion of the familiar personal cheque with an added layer of security and guarantee. In essence, it is a personal cheque issued by an individual, with a significant difference: it bears the stamp of certification by the issuing bank. 

This certification is an ironclad assurance that the funds required to honour the cheque are available in the payer's account.

Certified cheques find their niche in various financial transactions, particularly those where the payee seeks a guarantee of fund availability and protection against the dreaded scenario of a bounced cheque. Such security becomes paramount in high-value purchases, business dealings, or any context where the recipient's trust in the validity of payment is non-negotiable.

One of the primary advantages of employing a certified cheque is the mutual peace of mind it confers upon both the payee and payer. The payee is assured that the funds are secure and guaranteed. At the same time, the payer can sidestep the inconvenience and potential fees associated with the dishonour of a cheque due to insufficient funds.

The process of obtaining a certified cheque

Obtaining a certified cheque is a straightforward process:

  1. Visit your bank: As the payer, you initiate the process by visiting your bank, where you hold your account.
  2. Request a certified cheque: At the bank, you request a certified cheque specifying the amount you wish to pay. You'll need to provide the recipient's name and possibly their banking information.
  3. Funds verification: The critical step in this process involves the bank verifying that you have sufficient funds to cover the cheque. This step is crucial for issuing a certified cheque, ensuring it won't bounce due to insufficient funds.
  4. Certification: Once the bank confirms the availability of funds, they will stamp or mark the cheque as "certified," signifying their guarantee of payment.
  5. Issuance: The certified cheque is then issued to you, and you can provide it to the payee.
  6. Payee's deposit: The recipient can deposit the certified cheque into their bank account or cash it at their bank, knowing the funds are secure.

Advantages of certified cheques

  1. Security: Certified cheques offer a high level of security, assuring both parties that the funds are available.
  2. Peace of mind: Payees can trust certified cheques, knowing they won't bounce due to insufficient funds.
  3. Suitable for large transactions: Certified cheques are ideal for significant transactions, such as real estate purchases, where a high level of security is paramount.
  4. Fraud prevention: The certification process helps prevent fraud, as the bank verifies the payer's identity and the availability of funds.
  5. Clear record: Certified cheques create a clear paper trail, making it easy to track the transaction.

What is a bank draft?

bank draft stands as another stalwart in the realm of secure payment instruments, often used for substantial payments or transactions that demand the highest level of security. Unlike certified cheques, which draw funds directly from the payer's account, bank drafts can be funded either by the bank itself or the payer's account, depending on the specific circumstances.

Obtaining a bank draft is somewhat more intricate than acquiring a certified cheque. It entails the payer providing comprehensive details to the bank, which then undertakes the responsibility of creating the draft on their behalf.

This layer of formality is often deemed necessary for more significant transactions, where the stakes are higher, and the security requirements are more stringent.

Upon issuing a bank draft, the bank deducts the specified amount from the payer's account or utilizes its funds to create the draft, which is subsequently payable to the recipient. These drafts are often issued in the recipient's name and carry the assurance of being backed by the bank itself.

This translates to a secure transaction for the payee, given that the issuing bank is reputable and financially stable.

The process of obtaining a bank draft

Obtaining a bank draft involves the following steps:

  1. Payer's request: The process starts with the payer visiting their bank and requesting a bank draft. Like certified cheques, the payer specifies the recipient's name and the amount to be paid.
  2. Funds verification: Just like with certified cheques, the bank verifies that the payer's account holds sufficient funds to cover the draft.
  3. Draft creation: Once funds availability is confirmed, the bank creates the bank draft, often adding the recipient's name to the draft to ensure it can only be deposited by the intended payee.
  4. Issuance: The bank issues the bank draft to the payer, who can then provide it to the payee.
  5. Recipient's deposit: The payee can deposit or cash the bank draft, knowing the funds are secure.

Advantages of bank drafts

  1. Highest level of security: Bank drafts offer unparalleled security, as they are drawn on the bank's own funds or backed by the bank.
  2. Ideal for significant transactions: Bank drafts are the go-to choice for substantial transactions, including real estate purchases or vehicle purchases, where the security of funds is crucial.
  3. Accepted globally: Bank drafts are widely accepted internationally, making them suitable for cross-border transactions.
  4. Reduced risk of fraud: The bank's involvement in issuing bank drafts reduces the risk of fraudulent transactions.
  5. Clear record: As with certified cheques, bank drafts create a clear paper trail, facilitating transaction tracking.

Comparing certified cheques and bank drafts

Now that we have established a fundamental understanding of certified cheques and bank drafts, let's embark on a comprehensive comparison,


Both certified cheques and bank drafts may involve fees, though the fee structure can vary based on the financial institution. Certified cheque fees are typically lower than those associated with bank drafts. However, the precise fee amount will depend on the bank's policies and the payer's account type.

Transaction process:

The process of obtaining a certified cheque is relatively straightforward. The account holder writes a personal cheque, and the bank verifies fund availability before certifying it. In contrast, getting a bank draft requires the payer to provide details to the bank, which then creates the draft on their behalf. Bank drafts are often used for more substantial transactions, making the process more involved due to additional paperwork and verification.

Fraud prevention:

Both certified cheques and bank drafts offer a high level of fraud prevention. Certified cheques are secure because the issuing bank guarantees the funds, and bank drafts are highly secure as they are drawn on the bank's funds. However, it's essential to note that fraudulent bank drafts can occur if the issuing bank is not legitimate. Preventing such fraud involves obtaining a bank draft from a reputable financial institution.

The role of financial institutions:

Financial institutions play a pivotal role in issuing and verifying certified cheques and bank drafts. Bank representatives, including bank tellers and employees, are responsible for certifying cheques and issuing bank drafts. They also ensure the payer's account has sufficient funds to cover the payment. Additionally, the availability of funds in the payer's account and the guarantee of payment are critical responsibilities of financial institutions in these transactions.

Large payments and business days:

Both certified cheques and bank drafts are commonly used for substantial payments, such as real estate transactions, vehicle purchases, or significant investments. However, it's crucial to be aware that business days can impact the availability of funds. Transactions involving certified cheques and bank drafts may take longer to clear, especially if they fall on weekends or holidays.

Secure forms of payment:

Certified cheques and bank drafts are undoubtedly secure forms of payment. They provide peace of mind to both payers and payees by ensuring the availability of funds and minimizing the risk of fraud. The certification or guarantee of funds ensures the recipient can trust the payment instrument.

Certified cheque vs. bank draft: when to choose each

The choice between a certified cheque and a bank draft depends on the specific circumstances of your transaction:

Certified cheque:

  • Use a certified cheque for smaller transactions where the payee still requires assurance of fund availability.
  • Ideal for personal payments, such as paying a friend or relative.
  • It is convenient when you want to make a secure payment without the added paperwork of a bank draft.

Bank draft:

  • Opt for a bank draft when dealing with more substantial transactions, such as buying a house, a high-value item, or conducting significant business transactions.
  • Suitable for commercial deals where a high level of security is essential.
  • Recommended when the recipient requests a secure and guaranteed form of payment.

In essence, certified cheques and bank drafts serve as secure payment options in the world of finance. They offer peace of mind to both payers and payees by ensuring the availability of funds and minimizing the risk of fraud.

The choice between the two depends on the nature of the transaction, the amount involved, and the level of security required. By understanding the differences between certified cheques and bank drafts, individuals and businesses can make informed decisions to safeguard their financial transactions and ensure the smooth flow of large sums of money with confidence.

In the next section, we will delve further into specific scenarios where certified cheques and bank drafts can be employed to optimize financial transactions and protect the interests of all parties involved.

Navigating business transactions with certified cheques and bank drafts

Business transactions are an arena where the choice between certified cheques and bank drafts has a substantial impact. Businesses engage in various financial dealings, from purchasing equipment to acquiring other companies. Let's explore how these payment instruments fit into the world of business.

Certified cheques in business transactions

In business, certified cheques are often used in various scenarios:

Supplier payments:

Businesses frequently use certified cheques to pay suppliers, especially when establishing trust with new vendors.

Contractual payments:

Contractual agreements often involve milestone payments or payments upon completing specific tasks. Certified cheques offer assurance to both parties that the payment will be honoured.

Small business transactions:

Certified cheques are a practical choice for small businesses conducting transactions that do not involve extremely high amounts of money. They provide a secure payment method without the complexity of bank drafts.

Local business dealings:

For local business dealings where all parties are in the same geographical area, certified cheques may be the preferred choice due to their simplicity and lower associated costs.

Bank drafts in business transactions

For more substantial business transactions, bank drafts come to the forefront:

Acquisitions and mergers:

When businesses acquire or merge with other entities, the transaction's financial scale often necessitates using bank drafts to ensure a secure and guaranteed payment.

International business:

Companies engaged in international business dealings rely on bank drafts for cross-border payments due to their universal acceptance and high level of security.

Investment transactions:

Financial institutions and firms frequently use bank drafts for significant investment transactions, such as purchasing stocks, bonds, or other financial instruments.

Government and regulatory compliance:

Certain industries and government regulations may require bank drafts for specific financial transactions, such as securities trading.

Navigating personal finances with certified cheques and bank drafts

While real estate and business transactions often take center stage in discussions of certified cheques and bank drafts, these payment instruments also play a role in personal finance. Let's explore how individuals can utilize them in everyday financial dealings:

Certified cheques in personal finances

Large purchases:

Individuals making substantial personal purchases, such as buying a high-value vehicle or investing in collectibles, may opt for certified cheques to provide an added layer of security to the transaction.

Gifts and loans:

Certified cheques are a secure way to provide gifts or loans to family members or friends. This ensures that the recipient receives a guaranteed payment.

Legal settlements:

In cases of legal settlements, certified cheques may be used to disburse funds to beneficiaries or plaintiffs, ensuring the timely and secure money transfer.

Bank drafts in personal finances

Real estate transactions:

Individuals purchasing or selling property for personal use often utilize bank drafts for their significant payments.

Large investments:

Bank drafts are suitable for making substantial personal investments, such as purchasing shares in a company or acquiring valuable assets.

Travel and cross-border payments:

Bank drafts offer a secure and universally accepted payment method for international travel or cross-border payments.

Higher education:

Bank drafts are commonly used to pay university tuition fees, especially for international students studying abroad.

The verdict: confidence in secure payment

In all scenarios, whether real estate, business, or personal finance, the primary goal of utilizing certified cheques and bank drafts is to ensure security and trust in financial transactions.

Both instruments provide a level of assurance that goes beyond regular personal cheques or electronic transfers. They create a clear and documented transaction trail, making it easier for all parties to track and verify payments.

When deciding between certified cheques and bank drafts, individuals and businesses should consider the specific nature of the transaction, the amount of money involved, the level of security required, and any regulatory or industry-specific requirements.

Consulting with financial professionals or legal experts can also provide valuable guidance in making the right choice.

In conclusion, certified cheques and bank drafts stand as stalwarts in secure payment instruments, offering a shield of trust and reliability in an ever-evolving financial landscape.

Whether buying a dream home, closing a business deal, or simply making a significant personal investment, these payment methods empower you to navigate complex financial transactions confidently, knowing that your funds are secure and your financial interests are protected.