What is a check?

A check is recognized as a demand draft drawn on a bank, which means it is a written order directing a bank to pay a specified amount of money from the account of the check writer to the person named on the check or to the bearer. This mechanism allows individuals and businesses to transfer funds without the need for physical cash, making it a secure and widely accepted method of payment.

Check transactions require the writer to have sufficient funds in the specified bank account, ensuring that the transaction can be completed if processed. Checks provide a paper trail for both the payer and payee, which can be beneficial for record-keeping and accounting purposes. Additionally, checks can be postdated or even canceled if necessary, giving the writer a degree of control over the transaction.

Recognizing checks as demand drafts emphasizes their function in the banking system, distinguishing them from alternatives like cash payments, digital transactions, or bills for services, which serve different purposes in financial exchanges.