Bank drafts have a certain old-school charm—secure, reliable, and universally accepted. But in a landscape dominated by PayID, Osko, and digital wallets, are bank drafts still relevant for Australians in 2025? Whether you’re buying a car, settling a property deal, or making a large payment, understanding the role of bank drafts today can save you time and potentially money.
What Is a Bank Draft and How Does It Work?
A bank draft is a payment instrument issued by a bank on behalf of a customer, drawn on the bank’s own funds rather than the customer’s account. The payer purchases the draft by depositing the equivalent amount (plus fees) with the bank, which then issues a physical document guaranteeing payment to the recipient. In Australia, major banks like Westpac, NAB, CBA, and ANZ still offer bank drafts, although with increased scrutiny and sometimes reduced availability for walk-in customers.
- Security: Bank drafts are considered safer than personal cheques, as the funds are guaranteed by the bank.
- International acceptance: Still useful for large cross-border transactions where electronic transfers are impractical or costly.
- Physical paper: The draft is a negotiable instrument—think of it as a cheque backed by the bank itself.
Why Do People Still Use Bank Drafts in 2025?
Despite the rise of real-time payments, bank drafts haven’t vanished. Here’s why some Australians still choose them:
- Large transactions: Buying or selling property, vehicles, or assets where parties want an extra layer of security and a clear paper trail.
- International payments: Some overseas banks or government bodies still require drafts for payment, especially in Asia and Europe.
- Uncertainty with digital transfers: For situations where a recipient doesn’t trust an electronic transfer, a bank draft can offer peace of mind.
In recent property settlements, for example, some solicitors continue to request bank drafts (or bank cheques) for deposit and settlement amounts, particularly for transactions above $50,000. However, the use of PEXA and other e-settlement platforms is quickly eroding this practice in capital city markets.
The Pros and Cons of Bank Drafts in Today’s Market
Pros:
- Guaranteed funds: The recipient is assured the funds won’t bounce or be recalled.
- Widely accepted: Especially for international payments and some legal transactions.
- Traceable: Each draft comes with a serial number and receipt, making it easier to track.
Cons:
- Fees: Expect to pay $10–$30 per draft, with additional fees for international versions.
- Processing time: Delivery and clearance can take days—sometimes longer for overseas drafts.
- Lost drafts: If lost or stolen, replacing a bank draft can be time-consuming and may require indemnity bonds.
- Declining acceptance: Many institutions now prefer (or require) instant electronic transfers for speed and anti-fraud measures.
In 2025, some banks have tightened their anti-fraud controls around bank drafts, requiring extra ID checks or only issuing them to existing customers with verified accounts. At least one major bank has announced plans to phase out physical drafts entirely by 2026, citing low demand and security risks.
Alternatives to Bank Drafts in 2025
With the Australian payments landscape evolving rapidly, alternatives to bank drafts are now widely available and, in many cases, preferable:
- Osko/PayID: Instant, secure, and supported by all major banks for payments up to $1 million, with real-time settlement.
- Wire transfers (SWIFT): Still a gold standard for large international transactions, albeit with higher fees and slower processing.
- PEXA and e-settlement platforms: Now standard for most property settlements in NSW, VIC, and QLD.
- Bank cheques: Similar to drafts but usually only valid within Australia, and now often replaced by electronic payment confirmation.
In short, unless you’re dealing with a recipient who explicitly requires a physical bank draft, most Australians are better off using digital payment methods for speed, convenience, and lower cost.
Key Takeaways for Australians in 2025
- Bank drafts are still available, but their use is declining as digital payments become the norm.
- They remain valuable for certain legal, property, and international transactions.
- Expect tighter controls and higher fees as banks phase out paper-based payment tools.
