DEFINITION of 'Sales Draft'

A sales draft is a record indicating that a cardholder has made a purchase. A sales draft is provided at the end of a transaction made by a payment card, such as a credit card. It is a legally binding agreement between the cardholder and the organization providing the good or service that the cardholder purchased.

BREAKING DOWN 'Sales Draft'

When a payment card is used in the purchase a good or service, the swipe of that card into a terminal sets off a series of processes designed to determine whether the cardholder has the funds available to make the purchase. A card acquirer encrypts the cardholder’s information and sends it to the card processor, who decrypts this information, verifies that the cardholder has sufficient funds, and then sends a confirmation to the card terminal indicating that the transaction is valid. This entire process is typically instantaneous.

Once the card processor has approved a transaction the cardholder indicates that the sale is final by signing a receipt. The receipt is traditionally printed, but for some transactions the receipt may be provided electronically. The cardholder signs the physical receipt or electronic receipt acknowledging that a good or service has been purchased, and that he or she promises to pay the amount indicated on the receipt. The receipt then serves as a record of the transaction.

Why a Sales Draft is Retained After a Purchase is Made

The sales draft contains specific information about the transaction, including the credit card number (typically the last several digits to ensure security), the transaction authorization number (TAN) provided by the card processing company, the card’s expiration date, the amount of sale, a description of what is purchased, and the signature of the cardholder. Merchants that issue the sales draft are required to keep a copy of the original signed paper for a specific period of time – typically several years - and will use the receipt as a reference if a chargeback is made or if the cardholder questions the transaction.

If a copy of a sales draft is requested in order to authenticate the transaction, there may be a retrieval fee charged by the credit card processor to the cardholder’s issuing bank. That fee is not part of a potential chargeback. A retrieval of a sales draft may occur if the cardholder sees charges they do not recognize and want more information, if the cardholder is disputing charges to their account, or if the credit card issuer suspects fraud because the charge seems outside the standard purchase behavior of the cardholder.

RELATED TERMS
  1. Additional Cardholder

    An additional cardholder is an authorized secondary user added ...
  2. Cardholder Agreement

    A printed booklet a credit cardholder receives that contains ...
  3. Cash Back

    Cash back generally refers to a cardholder benefit offered by ...
  4. Go-To Rate

    The interest rate that will come into effect after an introductory ...
  5. Reference Number

    A reference number is a unique identifier assigned to each transaction ...
  6. Credit Card Funding

    The ability to electronically fund a new account, business, or ...
Related Articles
  1. Personal Finance

    3 Best Credit Cards for Traveling to the UK (COF, BCS)

    Discover three of the best credit cards to use while traveling to the United Kingdom, based on security and rewards programs.
  2. Personal Finance

    How the Victoria's Secret Credit Card Works: Benefits and Rewards (LB)

    Here's how the Victoria's Secret credit card works: application process, the benefits, the downfalls and the other pertinent details.
  3. Investing

    How American Express Makes its Money

    Consumers like novelty, reliability, variety, and other subjective qualities. But what really keeps them coming back to American Express is convenience.
  4. Personal Finance

    Credit Card Review: Chase Freedom (JPM, AMZN)

    Learn about the Chase Freedom card and how it earns 1% cash back on every purchase and up to 5% on purchases in quarterly categories.
  5. Personal Finance

    4 Best Credit Cards for Military Veterans in 2016

    Discover the four best credit cards for veterans, including the programs with the best airline mileage rewards, points for dining out and gas purchases.
  6. Personal Finance

    Gold vs. Platinum Amex Card: Which is for You?

    A close look at the benefits – and fees – of these two levels of shining "metal" cards from American Express.
  7. Personal Finance

    3 Best Credit Cards for Restaurants in 2016

    Credit cards with restaurant rewards can be lucrative, if they are managed properly. Here are three cards with the best features.
  8. Insights

    The Evolution Of Credit Card Security

    With the increase in credit and debit card fraud, these measures have been taken to ensure your financial security.
  9. Personal Finance

    Credit Card or Cash?

    Credit cards are convenient to use, but not always the best choice. Here are five times you shouldn't pay with a credit card – and five times you should.
RELATED FAQS
  1. Can the Best Buy credit card be used anywhere?

    Learn how the Best Buy credit card can only be used in Best Buy stores and online to make purchases through the Best Buy ... Read Answer >>
  2. How is the minimum payment on a credit card calculated?

    Even when minimum payments are low, consumers should still aim to pay off credit card balances every month. Read Answer >>
  3. What is the difference between a prepaid credit card and a gift card?

    Although prepaid and gift cards are used in the same manner, a prepaid credit card can be used repeatedly, while a gift card ... Read Answer >>
  4. Does Netspend report to credit bureaus?

    Learn if NetSpend can report your information to a credit bureau and discover what personal information you need to open ... Read Answer >>
  5. How long should you hold on to credit card statements?

    Holding on to credit card statements can be helpful when they contain personal purchases, tax-deductible items, or products ... Read Answer >>
  6. Debit card versus credit card

    Can't figure out which card to use when making a purchase decision? Here is everything you need to know about the differences ... Read Answer >>
Trading Center