What it means
When a customer pays by credit or debit card, the sale must be recorded and passed to the merchant's bank so the money can be collected from the card issuer. The sales draft is that record.
It proves the customer agreed to the purchase and the amount, and it supports the merchant's claim for payment. In the past, the merchant used an imprinter to copy the card onto a three-part paper slip that the customer signed.
The merchant kept one copy, gave one to the customer and sent one to the bank. Today card terminals and online payment systems create the record electronically, often with a PIN or a signature on the screen.
The bank that processes the merchant's card payments, called the acquirer, collects the drafts, usually in daily batches, and credits the merchant's account after deducting fees. The fee is often called the merchant discount rate and is expressed as a percentage of the sales.
Fees vary with the type of card and how the payment was made. Keeping sales drafts, or their electronic equivalent, is important if a customer disputes a charge.
A chargeback happens when the card issuer takes the money back from the merchant after a complaint. A signed or authorised sales draft is the merchant's main evidence in the dispute.
For a finance team, the drafts feed the daily reconciliation of card takings against bank deposits. Differences between the two often reveal timing issues, fees, refunds or errors that need correcting before they grow.
Fraud prevention is a major reason for good draft handling. Cards that are keyed in by hand, or transactions without a chip or PIN, carry a higher risk of disputes, so acquirers often charge more for them.
Businesses can cut both fees and fraud by using chip, contactless and tokenised payments where possible.
In practice
Real-world examples.
Example
A restaurant closes its card terminal at the end of the night. The terminal batches the evening's sales drafts, which total $4,800, and sends them to the acquiring bank. The manager compares the batch total with the till report before leaving.
Example
A hotel receives a chargeback from a guest who disputes a $600 charge. The finance manager sends the signed sales draft and the booking record to the bank as evidence. The hotel keeps the file for the period its card agreement requires.
Example
A market stall owner takes card payments on a mobile reader. She checks the drafts against her daily sales log and finds a $35 difference that turns out to be a refund she forgot to record.
Formula
Calculation
Net deposit = Total sales draft value - (Total sales draft value x Merchant discount rate).
A shop submits sales drafts totalling $12,000 for the day, and its acquirer charges a merchant discount rate of 2.5%. The fee is $12,000 x 0.025 = $300. The net deposit into the shop's account is $12,000 - $300 = $11,700. If the shop's average sale is $50, then $12,000 of drafts represents about 240 transactions, and the $300 fee works out at $1.25 per sale.Case study
Seen in the real world.
Cobalt Electronics is an entirely fictional retailer that takes thousands of card payments each month. In this illustrative story, the finance manager notices that bank deposits are consistently lower than the sales drafts by about 2.8%.
She compares the acquirer's statements with the drafts and finds that the fees are split between a base rate and extra charges for cards processed without the chip. About $4,000 a month is lost to the higher rate on manually keyed payments.
The store retrains staff to use the chip reader for every sale, and the extra charges fall by almost half. The illustrative lesson is that careful review of sales drafts and fees can reveal avoidable costs. By the next quarter the monthly saving paid for two new card terminals and left a small surplus.
Watch out
Common mistakes.
- Throwing away sales drafts or records too early, when they are needed to defend chargebacks that can arrive months after the sale.
- Assuming the amount in the draft is the amount deposited, when fees are deducted first.
- Keying in card details by hand when a chip or contactless payment is available, which can raise fees and fraud risk and weaken your position in a dispute.
Questions
People also ask.
What is the difference between a sales draft and a receipt?
The draft is the record sent to the bank for payment, while the receipt is the customer's copy.
How long should I keep sales drafts?
Keep them for the period set by your card agreement and tax rules, which is often several years.
What is a chargeback?
It is when the card issuer reverses a payment after a customer disputes it, and the merchant must provide evidence.
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