Glossary term
Bank Draft
A payment instrument drawn by a bank on itself or on another bank, used where a buyer’s own cheque would not be accepted.
An order to pay drawn by a bank rather than by a trading party, which is what gives it standing: the payer is a bank, not the buyer.
It is a payment method, not a security mechanism. It says nothing about whether goods conform, which is the gap a letter of credit exists to close.