How to Make a Demand Draft

Last Updated: December 15, 2020 References

A demand draft is a document that allows you to withdraw money from another person's bank account without needing a signature. The person that is withdrawing money will need to have routing and account numbers, in addition to the account holder's permission. Learn how to safely use a demand draft to easily transfer funds.^{[1]
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US Consumer Financial Protection Bureau
U.S. government agency for protecting consumers in the financial sector
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Part 1

Part 1 of 2:

Prepare the Necessary Information

1
Gather the necessary information. Before a demand draft can be created and deposited, the proper information will need to be acquired. This information will be used to fill out the demand draft itself and will be examined by the bank when it is deposited. See the following overview of the information that will be required: ^{[2]
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US Consumer Financial Protection Bureau
U.S. government agency for protecting consumers in the financial sector
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- If selling an item or service you will need to provide accurate details to your client about that item or service.
- You will need to obtain the account and routing numbers of the account belonging to the person paying.
- Consent by the person whose account will be debited to the transferral of funds by demand draft, written or verbal, must be obtained. Verbal consent should be recorded, while written consent might take the form of a faxed document with a signature and date.
2
Give legally required information if selling a service or good. If you are working remotely with a client to sell them a service or good, it is a good idea to provide the proper information about either, as this can limit liability or promote customer relations. In addition, the financial institution accepting a demand draft might have consumer protection requirements before agreeing to transfer. Inform your client upfront about your sale by meeting the following criteria:^{[3]
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- The exact price and amount of items or services being sold.
- Additional information about the item or service regarding extra fees, deposits, certifications, limitations, etc.
- Any refund policy or no-refund policy.
- If any prizes for purchase are being offered, the exact details must be disclosed. These details include the chances of winning, costs of winning, or methods of entry with or without payment.
- Any payment plan that is similar to a “free-trial offer,” which will require the buyer to take action to avoid future payments.
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3
Obtain information regarding your client's bank account. You will need to acquire the necessary pieces of information to successfully deposit the demand draft in your own bank account. Since a demand draft doesn't require a signature, providing accurate information is critical.^{[4]
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US Consumer Financial Protection Bureau
U.S. government agency for protecting consumers in the financial sector
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- You will need to obtain both the account number and routing number of the bank account being used to make the payment or payments.
- Routing and account numbers are found at the bottom of a check. The routing number appears first, at left, and consists of nine digits. The account number appears after the routing number, just to the right of it.^{[5]
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4
Obtain consent. Although a demand draft doesn't require a signature, it does require some form of consent on the part of the person having money withdrawn from their account. Either written or spoken consent will suffice.
- Verbal consent is acceptable, however, you will need to have a recording of the consent.^{[6]
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  Research source} You may wish to record the entire conversation.
- If making a recording of verbal consent, make sure to include the date of the agreement, the amount being agreed upon, the name of the client, the number of payments, a telephone number where the client can call, and the date of authorization. ^{[7]
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- Obtaining written consent can be the safest option. However, it may take more time as you wait for the written form of consent to arrive. Have the client write the date he agreed, the amount he agreed to pay, his name, number of payments, telephone number where the client can call, and the date of authorization.^{[8]
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- Written consent may be obtained in the form of a fax signed by both parties or a voided check sent by the client. ^{[9]
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Part 2

Part 2 of 2:

Making and Depositing the Demand Draft

1
Create the demand draft. You will need an official form and format to complete your demand draft. The safest method to create your demand draft will be to obtain an official form from your bank.
- Banks can offer their own forms for demand drafts which you can obtain from them.^{[10]
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- An example of a demand draft form from a bank can be found here at "HSBC.com"
- Some online services are available to help create and send a demand draft. However, the safest option is to work directly with your bank or their official website.
- Be very careful when selecting a service outside your bank as demand draft scams can occur.^{[11]
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  Federal Trade Commission
  Independent U.S. government agency focused on consumer protection
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2
Print your demand draft document. After you have created your demand draft and filled in the the appropriate information, you should print it. You will need physical paper copies of the demand draft to officially deposit it.
- Print at least two copies for yourself. One will be submitted to your bank, while the other is held in your own records.
- You may wish to send an additional copy to your client.
3
Deposit the demand draft with your bank. After you have properly prepared and printed the demand draft, you are ready to deposit it with your bank. The process will be similar to depositing a check into your account.
- You won't need a signature on your demand draft as consent has already been obtained.^{[12]
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Warnings

Be aware of scams. If you are being paid for services using a demand draft make sure you trust the other party.^{[13]
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Trustworthy Source
Federal Trade Commission
Independent U.S. government agency focused on consumer protection
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Check with your bank before accepting payments in this form as your bank may not deposit a demand draft. You also need to make sure there are sufficient funds in the account from which you will be withdrawing payment.

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