Standing order and bank draft - SS3 Commerce Lesson Note

Standing Order:

A standing order is an instruction given by an account holder to their bank to make regular fixed payments from their bank account to another specified account. It is commonly used for recurring payments, such as monthly bills or loan repayments. Once set up, the bank automatically transfers the specified amount on the designated date without the account holder having to initiate the transaction every time. Standing orders provide a convenient and hassle-free way to make regular payments while ensuring they are made on time.

Bank Draft:

A bank draft, also known as a banker's draft or cashier's cheque, is a secure payment method used for large transactions or when the recipient requires a guaranteed form of payment. It is issued by a bank and drawn directly from the bank's account. A bank draft is like a check, but instead of being drawn on an individual's personal account, it is drawn on the bank's own funds. The bank guarantees the payment, as the funds are already deducted from the account when the draft is issued. Bank drafts are often used for high-value purchases, international transactions, or when a secure and reliable form of payment is required.