Technically money order is a document from the bank, post office or credit union that provides you with money.
- Cheques, on the other hand, is a popular mode of payment.
- It is because it is very convenient to issue a cheque but, cheques are not prepaid.
- The biggest benefit of a money order is that it is prepaid.
- A prepaid payment document is certainly more reliable than a cheque.
- It is proof that the issuing individual or company has the particular amount that is to be paid.
Merits of Payment By Money Order
1. Money order cuts down the risk of a fraudulent activity that can occur in the case of cheques.
2. A money order ensures reduced risk of theft that prevails in the case of cash. Carrying cash to long distances by a public mode of transport can increase the risk of theft.
Converting the cash into a money order makes it convenient to take a big amount of money from one place to another far away place.
3. Often customers use money order services. Some people are in a habit of using the money order to make and receive payments. This can be the direct reflection of the service being safe.
4. A safe mode of payment is used more often than others to make sure a successful transaction.
5. It may prove to be a risk sending the money through the mail as it may get stolen.
6. The service is secured for another reason. That is authorization is necessary for cashing in a money order. Even if the document is misplaced by the bearer, it is almost impossible for any other person to misuse it.
7. A cheque can bounce, but the payments made by money order are paid before hand. So, the money order rarely bounces.
8. A money order can also be used as evidence that the payment has been made or received.
Demerits of Money Order
1. A money order can be forged to obtain more money than originally amounted.
2. There is a processing fee involved. The processing fee is the money you pay to get your cash get converted to the money order and further from money order to cash.
3. The processing fee for a money order increases with the increase of money that is to be converted into a money order.
4. Counterfeit money orders can be issued to make the payments. That may result into the bouncing of money orders. Also, presenting a money order for which the payor has obtained already withdrawn money will cause it to bounce.
5. To bank a money order, one may require hiring a person to go to the bank or post office to withdraw money. This will increase the labour cost.
6. If a person visits the bank or post office by themselves, it may result in time wastage.
When To use
It is advisable to make and receive payment to and from international clients via Money Orders. This will ensure that the you receive a guaranteed compensation from the client for the services provided by you.
In Spite of mailing the cash through the post. It is advisable to use Money Orders to keep the hard earned money safe and secure.
Some Customers may demand payments through money orders if they are to carry the money to long distance via public transit.
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