Payable Through Draft

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DEFINITION of 'Payable Through Draft'

A draft that is payable through a specific bank. Payable-through-draft instruments draw money from the account of the issuer. Corporations use these instruments to pay bills, and insurance companies use them to pay claims.

INVESTOPEDIA EXPLAINS 'Payable Through Draft'

The bank's name is printed on the face of the draft. However, it does not verify either the signature or the endorsement; this is the responsibility of the issuer. Credit union share drafts are also payable-through-draft instruments, usually cleared by a correspondent bank.

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