What Is a Drawee?

A banker discusses movement of funds with customers.

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A drawee is one of the three parties involved in the check cashing process, which also includes a payor and a payee. A drawee is the party that processes the check (usually a bank). A payor is the party that issues the check (the money will ultimately get removed from their account). And the payee is the person who receives the money.

Key Takeaways

  • A drawee refers to the person or organization that accepts and pays a certain sum of money to a payee.
  • The drawee typically acts as a go-between, redirecting funds from the payer’s account to the payee’s account.
  • The drawee is usually a bank but check-cashing companies and even retail stores can also act as drawees.

Definition and Example of a Drawee

A drawee refers to the person or organization that’s ordered to pay a certain sum of money to a payee. The primary role of a drawee is to redirect funds from the payor’s account to the payee’s account.

The most common example of a drawee is a bank. They act as a drawee each time you deposit a check or receive a bill of exchange

How Does a Drawee Work?

The drawee is typically an intermediary or go-between during a financial transaction. In other words, they’re the ones directing funds from the payor’s account to the payee’s account. 

In most situations, the drawee is whichever bank the payor (i.e., the payer) uses. This bank is responsible for removing money from the payor’s account to pay whichever checks the account holder issued.

For example, if your friend writes you a check from her bank account at Wells Fargo, Wells Fargo is the drawee. If your employer banks with Chase, then Chase is the drawee of your paycheck. 

Anytime you facilitate an outgoing transaction—whether it be writing a check, paying employees, or using online bill pay—your bank is acting as the drawee because they’re the ones responsible for moving money from your account to the payee’s account. 

Types of Drawees

A drawee doesn't always have to be a bank. It can also be an independent company that facilitates wire transfers, money orders, or check cashing. However, it should be noted that for wire transfers themselves, there is no drawee because the wires are pushed through from institution to institution rather than drawn from a bank with a draw request.

For example, suppose you use Western Union to wire money to a relative overseas. Western Union and its bank would be the drawee in practice—remember, they push the wire through—because they facilitate the transaction. You would be considered the "drawer" (i.e., the person who initiated the wire, usually referred to as the payor), and your relative would be the payee (i.e., the person getting paid the money). 

If you want to get really out of the box, retail stores that accept coupons can also be an example of a drawee. 

For example, let's say you get a coupon in the mail for $2 off Tide. You go to your local grocery store and hand them the coupon at checkout. In this case, the manufacturer is the payor because it issued the coupon. You are the payee because you're receiving the discount. And the retail store is the drawee because they're legally obligated to honor the coupon. 

Now let's say Tide was on sale for $1.99, and your coupon was for $2, resulting in the grocery store owing you 1 cent. The store would give you a penny, then get reimbursed by the manufacturer (i.e., the payor). The store wouldn't lose any actual money. They'd simply facilitate the transaction — the same as a bank would if you were cashing a check.

Payor vs. Drawee

Drawer Drawee
Issues the check, money order, or cashier’s check Processes the transaction
Will ultimately have funds deducted from their account when the transaction clears Is responsible for transferring the funds from the drawer’s account to the payee’s account.

The payor is also referred to as the payor. They’re the person or entity who actually issues the check or bill of exchange and ultimately ends up having the amount deducted from their bank account balance.

The drawee is the party that channels the money from the payor’s account into the payee’s account. They don’t actually pay or receive any money. They simply facilitate the transaction. The drawee is usually the payor’s bank. 

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  1. Cornell Law School, Legal Information Institute. "Payee."

  2. Cornell Law School, Legal Information Institute. "Drawee."

  3. Cornell Law School, Legal Information Institute. "Payor."

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