International banker’s drafts guide

An international banker’s draft is accepted in most countries and is created in the currency of the destination where it’s sent. Although there are much quicker ways to send money overseas, if time isn’t a factor when you’re transferring money to someone overseas, banker’s drafts are a decent option.

What is an international banker’s draft?

Also sometimes known as a “bank cheque”, a banker’s draft is like asking a bank to write a cheque for you. Some people might ask to receive an international banker’s draft as a more secure way of receiving money abroad – it’s more secure because the funds for the transaction are withdrawn from the bank, rather than from the person’s account.

Unlike normal cheques, banker’s drafts are prepaid and issued by the bank. Drafts can also be drawn in the foreign currency you choose and are available for personal or business use. They have a few advantages when used for international transfers:

• Exchange rate. Banker’s drafts are exchanged immediately when they’re created. So going to your bank and creating an international banker’s draft for €100 will use that day’s exchange rate, while a cheque or postal order will use the exchange rate when it’s cashed – which could lead to less money being sent if the exchange rate shifts heavily.
• Typically safer. Many money scams involve fake postal orders or cheques. An international banker’s draft can be verified by contacting the issuing bank and providing the details on the draft itself.

How does an international banker’s draft work?

A banker’s draft is effectively a cheque from a financial institution. This means the funds for the transaction are withdrawn from the institution, rather than from the individual’s account.

The funds from a normal cheque aren’t withdrawn from the individual’s account until the cheque is cleared, which leads to the risk of there not being sufficient funds available when the cheque is cashed and it may therefore bounce.

When someone requests an international banker’s draft, though, they must immediately transfer the funds from their account to cover the amount of the cheque, which adds a crucial extra level of security. Drafts can be drawn in the foreign currency you choose and are available for personal or business use.

How do I cash an international banker’s draft?

You can cash a banker’s draft in a variety of ways, including:

• At the bank. Bring the banker’s draft to your bank, along with photo identification, and ask for it to be deposited into your account.
• At a cashpoint. Some banks let you deposit banker’s drafts at cashpoints, as long as you hold an account with the bank. However, bear in mind that funds may not be immediately available.

How to compare international banker’s drafts

• Fees. This is the most important factor to look at when comparing banker’s drafts. Look at the different fees charged for obtaining a draft and see if you could save money with a different provider.
• Available currencies and countries. Speak to your bank about the currencies in which you can obtain an international banker’s draft and the countries to which you can send them. If your bank doesn’t support banker’s drafts in your desired foreign currency, compare international money transfer options to send a transfer online.
• Processing time. Once you apply for a draft, how long will it take for your financial institution to process it?
• Application options. It’s also a good idea to compare the different methods available when applying for a banker’s draft. You’ll typically need to visit a branch or apply in writing.

Pros and cons of an international banker’s draft

Is an international banker’s draft my best option?

An international banker’s draft is a secure way to send money abroad – but you have to rely on the postal service to deliver the banker’s draft safely. Many things can go wrong along the way, and even when everything goes right, there will still be a significant delay between sending and receiving the draft.

Consider using an international money transfer service instead of a banker’s draft when speed and convenience are crucial.

Using a banker’s draft to pay someone abroad

The transfer services below are not banker’s drafts, but rather allow you to make bank transfers which can be received by your recipient in their bank account or as cash. Consider using these services when:

• Speed is important. Some international money transfer companies can have money in your recipient’s account in as little as a few minutes.
• You want to pay in cash or with a credit card. An international banker’s draft is limited to payment by bank account, so use an international money transfer service to pay by debit card, credit card or cash.
• Your bank is closed. Banker’s drafts have to be created at the bank, in person, but online money transfers can be sent 24/7, 365 days a year from the comfort of your home.
• Exchange rates are important. An international banker’s draft uses the exchange rate offered by your bank, which might not be as strong as the mid-market rate offered by many money transfer companies.

Bottom line

An international banker’s draft has its time and place, but as the financial world shifts more and more into the digital realm, it might become obsolete. There are many ways to send money abroad that can be done entirely online. To learn how to get started with international money transfers, head over to our guide on transferring money abroad.

Frequently asked questions

• Can a business use an international banker's draft?

  Yes. If your business has overseas invoices that need paying, you can use an international banker’s draft to do so. However, they’re not a reliable option for invoices which require quick payment.

• I need to send an urgent transfer overseas – how should I do it?

  Your best bet is likely to find a trusted service that allows the cash you send to be picked up within minutes. Some such companies include WorldRemit, MoneyGram and Western Union.

• What are some quicker ways to send money overseas than using an international banker's draft?

  Banks offer international money transfers which can be typically processed between 24 hours and 5 days. Specialist online money transfer providers also offer quick fund transfers, with lower fees and better exchange rates than banks, while companies like Western Union and MoneyGram offer instant overseas money transfers.

• How long do cheques take to clear?

  Cheques typically take up to 3 business days to clear, while an international banker’s draft can often take between 4 and 6 weeks.

Written by

Zak Killermann

Publisher

Zak Killermann was a technical publisher at Finder who specialized in currencies and investing. Zak’s expertise was in breaking down technical finance concepts into approachable, digestible nuggets of information. See full bio