Demand Draft and Pay Order: Difference | Similarities | Meaning

A banker’s cheque, often known as a payment order, is a cheque used for local payments. A demand draft is a promissory note used to transfer money from one person in one city to another person in another city. All bankers’ checks are already printed with the words “NOT NEGOTIABLE.”

Demand Draft and Pay Order
Demand Draft and Pay Order

Definition of Demand Draft

Demand Draft, also known as DD, is a type of pre-paid negotiable instrument in which a drawee bank usually acts as a guarantor to make full payment when this instrument is presented. Demand Draft is different from other types of checks because the payment has already been made. Demand Drafts are mostly used to pay people who don’t live in a city.

Any branch of the same bank can clear a demand draft. Demand drafts are made by a bank employee, who also signs them, so there is no chance that they will not be paid. In fact, a person does not even have to have a bank account at the branch from which they are getting a Demand Draft. The person who is supposed to get the money must either put the Demand Draft into his or her bank account or pick it up from the branch that issued it.

When someone asks for a Demand Draft, the bank usually takes some money out of their bank account. So, when the demand draft is brought to the bank to be cleared, it is the banker’s job to pay the money. You can also pay cash to the bank to get a demand draft, but if the value of the draft is more than Rs. 50,000/-, you should only pay by check.

When the value of the demand draft is more than Rs. 50,000/-, the applicant is required to give his PAN. Demand drafts are usually made in Indian currency, but if someone needs to pay in a different currency, the draft can be made in that currency as well. In fact, demand drafts are an easy way to send money abroad without having to worry about the money not being cleared.

Definition of Pay Order

The banker’s cheque, also called a “pay order,” is a document that the bank gives to a customer on their behalf. It tells the bank to pay a certain amount to a certain person within the city. The Banker’s cheque is only good for 3 months, but it can be used again if certain legal steps are taken.

Banker’s cheque can’t be turned down because they are paid for ahead of time. It always says “not negotiable” on it, which means it can’t be negotiated any further.

Differences between Demand Draft and Pay Order

Both the demand draft and the pay order are basically needed or used for the same thing, but they are not the same thing. Here are the main things that make them different:

  • Pay orders, which are also called Banker’s Cheques, are a type of payment that can only be cashed in the same branch of the bank that issued it. Demand drafts, on the other hand, can be cashed in any branch of the bank that issued them.
  • A pay order says right on it that it can’t be changed, but a demand draft is a type of instrument that can be changed. A negotiable instrument is basically a piece of paper that promises to pay a certain amount of money to one person from another. It is a signed document that promises to pay the amount on demand at a certain time. It can be given to someone else.
  • Demand drafts can be cleared at any branch of the same bank, but pay orders can only be cleared at branches in the same city. Demand drafts can also be used to pay someone in a different state. If someone needs to pay someone in the same city, they should use a pay order.


  • Both are used to pay for and settle business deals.
  • The customer pays for both up front.
  • Due to the pre-payment clause, neither of these instruments can be thrown out.
  • Both are used to move money around.
  • Both have a three-month validity period.


Is demand draft same as bankers Cheque?

A banker’s cheque is a type of cheque that can only be used to pay for things in the same city. Demand draft are a type of financial instrument that can be used to send money from one person to another in a different city.

Is demand draft and pay order same?

It is a signed document that promises to pay the amount on demand at a certain time. It can be given to someone else. Demand drafts can be cleared at any branch of the same bank, but pay orders can only be cleared at branches in the same city.

What is difference between demand draft and bank draft?

Definitions of Demand Draft and Cheque

A demand draft is also a negotiable instrument, but it must be paid in full as soon as it is asked for. A demand draft comes from the bank, while a cheque comes from the customer of the bank. A customer can stop a cheque payment, but they can’t stop a DD payment.

What is the difference between a Pay Order and a Cheque?

A pay order is a cheque from the bank. It is also called a bankers cheque. Similar to a demand draft, but many banks won’t pay it anywhere. Cheque is a promise to pay a certain person or the person who has the cheque the amount written on the cheque.

Is a bankers cheque safe?

Banker’s cheque can only be used in the area where the bank is located. A banker’s cheque is good for 3 months from the date it was made. If a banker’s cheque is real, it can’t be turned down.

What is known as a banker’s cheque?

A banker’s draft, also known as a bank cheque, a bank draft in Canada, or a teller’s check in the US, is a cheque (or check) that a bank gives to a customer or that a customer gets from a bank to send money to another bank. It is drawn by the bank and is payable through or at a bank.

What does DD payment stand for?

A demand draft is a way for a person to transfer money from one bank account to another. Demand drafts are different from regular checks because they can be cashed without a signature.

How long does a pay order take to clear?

Different banks have different rules about how long it takes for a DD to clear. Most of the time, they are cleaned up in 30 minutes or by the end of the work day. Some banks can take up to three business days.

What is demand order?

Demand Order means an order placed by an Authorized Demander for any product listed in Annex A of the Schedule of Requirements.

Which is better: a cheque or a draft?

Here are a few other differences between a cheque and a DD:

The customer writes out the cheque, while the bank writes out the Demand Draft. The drawee can stop payment on a cheque, but that can’t be done with a DD. A cheque can be made out to the bearer or to an order. While DD is given to someone on demand.

How much is the most a demand draft can be for?

Terms and conditions for CRIF High Mark

Demand Draft AmountDemand Draft Charges
Up to Rs. 5,000Rs. 25
Rs. 5,000 to Rs. 10,000Rs. 50
Rs. 10,000 to Rs. 1 lakhRs. 5 per thousand or part thereof. (Minimum Rs. 60)
Above Rs. 1 lakhRs. 4 per thousand or part thereof. (Minimum Rs. 600 and maximum Rs. 2,000)

Can you cash a DD at any bank?

If the Demand Draft is crossed as “Account Payee,” it cannot be cashed at the bank branch. Instead, it must be deposited in the bank account of the person for whom the DD was made.


Both of these financial tools are basically safe ways to send money to anyone else. Most of the time, you have to go to the bank branch to use these ways to pay. Still, these instruments are needed because many colleges and schools prefer them to checks because they can’t be cashed without permission.