History
The history of bank drafts dates back to the early 19th century, when banks first began issuing drafts as a way for customers to make payments without having to carry large amounts of cash. Prior to the widespread use of bank drafts, people would typically use gold or silver coins, or sometimes notes issued by private banks, to make payments. These forms of currency were often heavy, difficult to transport, and not always widely accepted.
As banking systems developed and banks gained more trust from the public, bank drafts began to gain popularity as a means of payment. The first bank drafts were similar to personal checks, in that they were drawn on the account of an individual. However, by the mid-19th century, banks began issuing drafts that were drawn on the bank's own account. This made bank drafts a safer form of payment than personal checks, as the funds were guaranteed to be available.
In the 20th century, bank drafts became even more widely used as banking systems became more sophisticated and electronic banking became more prevalent. The use of bank drafts also expanded internationally, with many banks issuing drafts in different currencies to facilitate international trade.
Today, bank drafts are still widely used for large transactions, such as real estate purchases or business deals, as they provide a guarantee of payment. They are also commonly used for international transactions, as they are more widely accepted than personal checks. With the development of technology, bank drafts are now also available in digital form, like a wire transfer or Automated Clearing House (ACH) transactions.
Mitton, G., & Mosley, P. (2011). Financial markets, institutions and instruments (3rd ed.). Hoboken, NJ: John Wiley & Sons.
Hernández, S. (2015, November 4). Online Banking versus Automated Clearing House Payments. Retrieved January 18, 2021, from Investopedia website:
https://www.investopedia.com/articles/personal-finance/031916/online-banking-versus-automated-clearing-house-payments.asp
Galer, Carol C. “An Historical View of Bank Drafts.” Bank Compliance Alert, vol. 10, no. 8, 2005.
McKerrow, Ron. “Understanding Bank Drafts.” The Balance, 18 Feb. 1993, www.thebalance.com/understanding-bank-drafts-3192918.
Porteous, Derek. “Countryside: Bank Drafts: A Thing of the Past.” Business Day, 2017, www.businessday.co.zm/Bank-Drafts-A-Thing-of-the-Past/32835/.
“The Answer Is Never Black and White in Decision Making.” Miriam Akhtar & Dr. Chris Johnstone, 24 Sept. 2016.
The Decision Making Process. Frontley Associates Document
Decision Making. Encyclopedia of Management, Inc., 2009
McLynn, Madelynne. "What Is a Bank Manager? (Definition and Role)." The Balance Small Business, The Balance, 12 June 2020, www.thebalancesmb.com/what-is-a-bank-manager-525075.
