What Is the Difference between a Money Order and a Postal Order?
While a money order and a postal order are often considered to be the same type of financial instrument, there are a few subtle differences between the two. Those differences focus on where the instruments are obtained, where they may be tendered for cash, and who will accept each as a form of payment. In some nations, the level of risk associated with them also creates an additional distinction between the two.
One of the chief differences between a money order and a postal order has to do with where the instruments may be purchased. A postal order is purchased directly from a national postal system, such as the US Postal Service or the Post Office in the United Kingdom. By contrast, a money order is produced by an independent financial service provider and may be purchased at any number of retail outlets, including supermarkets or drugstores.
Another key difference is the reputation of the two instruments. While there are exceptions, creditors are usually more willing to accept a postal money order over a money order issued by an independent financial services provider. One of the reasons for this is the perception that postal orders are more difficult to forge than money orders issued by other entities. In addition, there are providers who tend to be somewhat slow with honoring payment, a factor that may lead some creditors to not credit customer accounts until the funds are actually received. In contrast, the face value of the postal orders may be posted immediately, since the chances of forgery or some other issue are relatively low.
Cashing the financial instrument is another difference between a money order and a postal order. Many banks, along with most post offices, will honor a postal order immediately by providing cash to the individual presenting it. In contrast, a money order may not be eligible for immediate cashing. Instead, the presenter would need to deposit the order into a bank account, and allow the bank time to clear it. This is another reason why many creditors will accept postal orders but may decline payment tendered in the form of a money order.
Both orders are viable means of sending cash or tendering payments. Since the postal order is typically considered the more reliable of the two options, it's probably the better choice when there is some doubt about where it will be cashed. Many businesses provide specific guidelines for using a money order or a postal order, including information regarding how long each instrument will take to post to a credit account, making it easier to determine which instrument is the best to use in a given situation.
Where Can I Cash a Postal Money Order?
Your Post Office money order can be cashed at many different establishments. Your local United States Post Office branch is the best place to start. You can cash your postal money order there free of charge. If your closest branch is a retail location, keep in mind that it will need to have enough cash on hand to redeem your money order. Cash will come in from retail sales during the day, so you may be out of luck if you try to cash your postal money order early in the morning.
Banks and Credit Unions
The next best place is a bank or credit union. Depending on the institution, you may be charged a modest fee for cashing the instrument. If you’re presenting a postal money order at your own bank, remember that it may be subject to your institution’s funds availability policy.
Grocery Stores and Big-Box Retailers
Many grocers and large retail stores such as Walmart still offer check and money order cashing services. Most of these come with fees, however, and there may be an upper dollar limit. In other words, they won’t cash checks or money orders that exceed this limit. If in doubt, call ahead and check with the store to see if these services are available. These establishments tend to chart flat rates for cashing – for instance, $4 for checks up to $1,000.
Check Cashing Centers
If you don’t have a bank account and can’t get to the Post Office or a retail store, a check cashing center may be your next possibility. Be prepared to pay fees for these services. Most charge a certain percentage of your check or money order amount. These percentages can range between 2% and 10%. So, if you’re cashing a $500 money order, you could end up forking over as much as $50 in fees to get your money.
Convenience Stores and Gas Stations
Gas stations and convenience stores that cash checks and money orders aren’t as rare as you may think. But it’s still wise to call ahead and make sure your preferred location offers these services. As with retailers and check cashing establishments, you’ll probably pay a fee. And like check cashers, convenience stores and gas stations may charge a percentage of your money order. Again, you’ll end up paying more than if you visit the Post Office or a bank.
Can a Post Office Money Order Be Forged?
While postal money orders are more reliable than other instruments, extremely clever thieves can still counterfeit them. These scam artists usually try to rip off people who sell goods online by sending them fake money orders. They also target the public with tactics such as promising hefty rewards for depositing the money order and sending them the funds.
Thankfully, there are still ways to tell a legitimate postal money order from a counterfeit. Domestic Post Office money orders cannot exceed $1,000, and international postal money orders can’t go above $700. Anything greater than these amounts is sure to be a fraud. Legitimate money orders will also have a Benjamin Franklin watermark on both sides when held up to a light source. They’ll also have a dark-colored security thread running from top to bottom on the right of the watermark with the letters “USPS” running both forward and reverse.
How Can I Avoid Money Order Scams?
To avoid being ripped off, you must recognize when someone’s trying a money order scam. We’ve already mentioned a couple of common versions, the “deposit assistance” tactic and fake money orders as payment for goods. But there are a few other versions that wily thieves may try:
- Buyer’s remorse: The scammer sends you a payment and then backs out of buying your goods but offers to let you keep part of the payment for “goodwill.”
- Rental reversal: Like buyer’s remorse, the scam payment is for an apartment or real estate. But in this case, the miscreant wants all the money back, as in yesterday.
- “Overpaying” a purchase: The thief sends you a money order for more than the amount owed. They then say, “Oops!” and ask you to send the difference back.
Before you deposit or cash any money order, you should verify the funds. Check the money order against the issuer’s sources to ensure that it’s genuine. If the sender puts pressure on you to act quickly, that’s a definite red flag. And if you sell on eBay or similar websites, you should never accept any checks or money orders as payment. Always insist on payment through traceable channels.
@Logicfest -- such things happens very rarely but there is still a way to protect against that scam. Simply don't send the item until the money order clears and don't spend the money you gained through it until you know it is good. If that $1,000 money order turns out to be no good but you haven't spent a dime of it, then you are in good shape. Your bank will only charge you if the fake is discovered and you've only spent the money.
But exercising caution is always a good idea.
There is another reason a lot of businesses and people prefer postal orders to money orders -- scams. That's right. There is a fairly common scam in which someone will purchase something online and then send a fake money order to cover the cost of whatever was purchased.
If you receive a fake money order and then deposit it in the bank, guess who is responsible? You are. That's right. If you deposit a fake money order valued at $1,000 and the bank figures out the thing is no good, you could be out $1,000 to cover the loss.
So, you're out an item you were selling and get to cover the amount of the fake money order. Nice.
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