Final answer:
A payable through draft is issued by a bank and involves verification of funds before payment is made, offering more security than a traditional check which may be written by an account holder and is subject to clearance and potential overdraft issues upon deposit.
Step-by-step explanation:
A payable through draft differs from a check in a few key aspects. While both instruments authorize the transfer of funds from a payer's account to a payee, payable through drafts are usually issued by financial institutions on behalf of their clients and are used for transactions that require more security than a traditional check, such as large corporate payments or real estate transactions. A draft is typically reviewed by the bank before the funds are released, which can add a layer of security, whereas a check can be written by the account holder and does not require bank approval before being presented for payment.
When using a check for payment for goods and services, the store or vendor deposits the check into their bank account. The bank processes the check and then requests the funds from the payer's bank. If the payer has insufficient funds, an overdraft may occur, which is a situation where the bank covers the payment but charges the payer a fee for the service.
On the other hand, drafts are more akin to a guaranteed form of payment, as the bank verifies the availability of funds and the authenticity of the draft before payment is made. This can be more reassuring to the recipient who needs a guarantee that the payment will not bounce, unlike a check that is subject to clearance and potential overdraft issues.