What is check draft?

What is check draft?

A check draft is a check that the person getting paid creates, not the person paying. It is also called a demand draft. The payer does not sign it. Instead, the payer gives permission for the payment, and the money is taken from the payer's bank account.

Quick answer: A check draft is started by the payee, with the payer's permission, and it does not need the payer's signature. A regular check is written and signed by the payer. Federal rules call a check draft a "remotely created check".

Check draft and regular check: what is different?

  • Who creates it: With a regular check, the payer writes it. With a check draft, the payee creates it.
  • Who signs it: With a regular check, the payer signs. A check draft does not carry the payer's signature.
  • What the payer does: With a check draft, the payer approves the payment, and then the funds move from the payer's account to the payee's account.

What the law says

Federal rules call this kind of check a remotely created check. The rule says it is a check that the paying bank did not create and that does not bear a signature applied, or purported to be applied, by the person on whose account the check is drawn. You can read the rule in 12 CFR 229.2, paragraph (fff).

Banks that deposit or send these checks must promise that the account holder approved the check for that amount. That is why you should always get the payer's approval first, and keep a record of it.

How to get started in ZIL MONEY

Step 1

Open Check Draft

In the left menu, click RECEIVABLES, then click Check Draft.
Left menu with the RECEIVABLES group open and Check Draft in the list

Step 2

Apply for Check Draft

The Check Draft page says "Apply for Check Draft to start creating check drafts". Click Apply for Check Draft and select a bank account and a business. Our team reviews and approves your application. Once it is approved, you can create check drafts.
Check Draft page with the Get started message and the Apply for Check Draft button

Common questions

Does the payer sign a check draft?

No. The payee creates it, and the payer gives permission for it.

Is a check draft the same as a demand draft?

Yes. These two names mean the same thing.

Is a check draft the same as an ACH payment?

No. A check draft is a check. An ACH payment is an electronic transfer.

Do I need the payer's approval?

Yes. Get the payer's approval before you create a check draft, and keep a record of it.

I need help with Check Draft.

Call (408) 775-7720, use the chat box in the lower right corner of the app.

This page gives general information. It is not legal advice.