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.