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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.
@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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