What Is the Difference between a Money Order and a Postal Order?

According to the United States Postal Service (USPS), postal money orders can be bought and redeemed at post offices across the country. In contrast, money orders are widely available, with over 500 million sold by various providers each year in the United States alone. 

These differences in availability and issuer can influence where and how these payment methods are accepted, impacting consumers' choices based on convenience and security. By discerning the subtle distinctions between a postal money order and a money order, individuals can make informed decisions that best suit their financial needs.

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.

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.

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.

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.

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.

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.

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.

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:

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.

A money order is a payment order for a pre-specified amount of money, which can be purchased and cashed at various financial institutions, post offices, and retail stores. A postal order, on the other hand, is similar but is specifically issued by a postal service. While money orders can be used internationally, postal orders are often limited to domestic use or within certain commonwealth countries.

Both money orders and postal orders are considered safe methods for sending money, as they do not contain personal bank account details and are prepaid, which means the funds are guaranteed. They are commonly used when personal checks are not accepted or when the sender or recipient does not have access to a bank account.

The cost to purchase a money order varies depending on the issuer and the amount being sent but typically ranges from under a dollar to a few dollars. Postal orders may have a fixed fee or a percentage-based fee, depending on the country and postal service. For example, in the UK, postal orders issued by the Royal Mail have fees ranging from 50p to £12.50, depending on the value of the postal order.

Money orders can generally be canceled if they have not been cashed, though this process may involve a fee and require the original receipt. Postal orders can also be canceled or replaced if lost or stolen, but the process and feasibility depend on the issuing postal service's policies. It's important to keep the receipt and any related documentation to facilitate cancellation or replacement.

Money orders can be cashed at various locations, including banks, credit unions, check-cashing stores, and some retail outlets. Postal orders can be cashed at post offices or deposited into bank accounts. Some financial institutions may also accept postal orders, but it's best to check with the specific institution beforehand. Always bring identification when cashing a money order or postal order, as it is typically required.