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Can Bank Drafts Be Cancelled

4 min read

can bank drafts be cancelled

Written By

Brandi Marcene

Have you ever tried making large purchases through the bank to purchase something for your business? That might be a bank draft. A bank draft is a secure payment method issued by your bank, and a bank draft typically is a way of paying large sums of money. It's similar to a certified cheque, which is also sometimes called a bank draft alternative, but the main difference is the guarantee of funds. The recipient can be sure the money is available. Bank drafts are personalized with the recipient's name and amount. They can be used in Canada or internationally in any currency. Remember, there are two parts: negotiable (like cash) and non-negotiable (transaction details). Keep the non-negotiable part safe in case the draft is lost or stolen, as you do with the certified cheques. They are usingmoney orders in Canada to keep things simple and under control.

How Does It Work

First, the person who wants to make a payment asks them to get a bank draft. The financial institution then checks if there is enough money in the person's bank account to withdraw cash.

If there is enough money, the bank agrees to the request, takes the money from the person's account, and gives them a bank draft for the same amount. The money taken from the person's account is usually kept in the bank's reserve account until the recipient uses the draft.

The bank drafts often have a small fee. However, many bank accounts include a few free bank drafts each year. You can also get international money transfers using bank drafts work.

But can the bank's drafts be canceled?

Can Bank Drafts Be Cancelled?

It all depends on the financial institutions and the reasons behind them. Bank draft can be challenging as the funds have already been withdrawn from the buyer's account and transferred to the bank's reserve account. However, if the bank confirms that the draft has not been cashed by the payee, it may agree to cancel it and refund the buyer's account.

Reasons Behind Cancellation

There can be many reasons why the draft may be canceled, but here are the following common reasons.

Lost or Stolen Bank Draft: If a bank draft is lost or stolen, it should be canceled without delay. The payer should inform their bank, providing details such as the bank draft number, guaranteed form, Interac e transfer document, chequing account information, issuance date, and amount.

Transaction Change: If the nature of the transaction changes and the payee no longer needs to receive payment, canceling the bank draft becomes necessary.

Incorrect Information: If the bank draft contains incorrect information, such as the wrong recipient or amount, the person making the payment should contact their bank to request cancellation.

Change In Mind Plan: If the payer changes their mind about the transaction and no longer wants to proceed, they should contact their bank immediately to cancel the bank draft.

Timing Of The Cancellation

When it comes to canceling it, it is important to have the right time for bank drafts to be canceled, as they say at the right time and the right place. The same thing is applied here. It is important to have the right time, which may be the following.

Cancellation From Online: This is a long process as online is known to have scammers and hackers. This means that there are online security measures as well. Some banks may ask you to fill out an online form and wait for confirmation before processing the cancellation. Check your bank's website for specific instructions.

Face To Face Cancellation: This means that in-person cancellations at a bank branch can usually be made on the same day the draft was issued. However, some banks may require a few days of waiting before allowing cancellation.

Paying Fees For Cancellation: Fees for canceling a bank draft vary depending on the bank and timeframe. Some banks charge a flat fee, likeelectronic transfer fees for online bank drafts, while others charge a percentage of the original amount. Contact your bank to know the applicable fees.

Conclusion

Banks are important financial institutions that provide services like money orders, issuing bank drafts, sufficient funds, bank withdrawals, sending money, personal cheques, guaranteed funds, and much more. The bank draft helps in dealing with things like large payments or making a large purchase. This does be helpful, but cancellation of it is difficult. It is difficult to cancel a bank draft as it is already in the bank system. But some reasons and timing can make that impossible possible.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!
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