Business

Difference Between Postal Order and Bank Draft

Main difference

The main difference between money order and bank draft is that a money order is a payment order for a predetermined amount of money, and a bank draft is a payment mechanism issued by the bank at the request of the person paying.

money order vs. Bank Draft

Money order is a payment method that requires the payer to pay a certain amount of money in advance and is considered a secure payment method as the amount made is already paid in advance. On the other hand, a bank draft is a payment check that is drawn on the bank’s money or fund after receiving the same amount from the issuer or issuer’s account, a bank draft also called a cashier’s check. Any association can create money orders; while, a bank draft issued or delivered by a bank. Money orders can be issued at authorized stores, outlets or post offices, and even banks. The banks themselves credit or credit the amount to the bank account when making the money order. Considering that the bank draft transfers to the payer or spender the responsibility and concern of the beneficiary or receiver to his bank, he can only issue from banks where the payer has a current account. Cash is used when purchasing a money order, which is why a money order is safer than a money order. Although a bank draft is a check drawn with bank money after accepting the amount from the issuer’s account, for this reason, it is less secure.

Comparison chart

Money order Bank Draft
A money order is a handwritten or document, much like a check, that is used to make a payment. A bank draft is a payment on account of a payer that is insured by the issuing bank.
Sure
Much safer than bank draft. Less secure than a money order.
Editor
The beneficiary and the financial institution issued the money order. The bank issues it at the request of its customers.

What is a money order?

A money order is an official document, usually issued by a banking administration, government, or organization that allows the specified payee to accept cash on demand. A money order works like a check, in that the person who bought the money order can stop the request for payment. Money orders are well accepted and are exchanged for cash and are commonly used by people who do not have access to a standard bank account. These arrangements are a suitable and acceptable payment method for small liabilities and debts, both personal and business, and can be purchased for a small service charge from most organizations. The financial entities or certified body that issues the money order to the payer will have the name of the beneficiary, the name of the issuer and the amount of money you can collect. Money orders do not contain personal data, such as your checking account number and your bank account number or details. Money orders can also be placed or deposited into a bank account, free of charge. The money order can be issued in one state and cashed in another state. The recipient who takes the money order does not have to go to essentially the same issuer who sold the money order. The receiver can have it withdrawn at a native bank or credit union, but cannot take all the reserves at once, responsible for the organization’s policy. If the recipient does not have an account, picking up the money order at the sender’s place of business is a good option. As is often the case, a money order can be used as a means of sending money abroad. The recipient who takes the money order does not have to go to essentially the same issuer who sold the money order. The receiver can have it withdrawn at a native bank or credit union, but cannot take all the reserves at once, responsible for the organization’s policy. If the recipient does not have an account, picking up the money order at the sender’s place of business is a good option. As is often the case, a money order can be used as a means of sending money abroad. The recipient who takes the money order does not have to go to essentially the same issuer who sold the money order. The receiver can have it withdrawn at a native bank or credit union, but cannot take all the reserves at once, Responsible for organization policy. If the recipient does not have an account, picking up the money order at the sender’s place of business is a good option. As is often the case, a money order can be used as a means of sending money abroad.

What is the bank draft?

A bank draft is a sum for a payer that is insured by the issuing bank. Typically, banks will review the draft applicant’s account to see if adequate funds are available for the check to clear. After confirming that there are sufficient funds, the bank efficiently reserves the funds in the person‘s account to be delivered when the bank draft is used. A draft guarantees the beneficiary a secure payment procedure. And the balance of the bank account of the payer or customer will be reduced by the withdrawal of money from the account. Obtaining a bank draft requires that the client has already deposited or placed funds up to the amount of the check and the corresponding fees in the issuing or adjudicating bank. The bank forms a check for the recipient drawn on the bank account. The customer’s name is on the check, but the bank is in existence to make the payment. A bank assistant or officer signs the check. The purposes of a bank draft are similar to those of a cashier’s check. A bank draft may be required by a seller when they have no association with the consumer; a deal includes a high selling price or the seller’s beliefs may be difficult to collect. For example, a seller will need a money order when he sells a house or a vehicle. a deal includes a high selling price or the seller’s beliefs may be difficult to collect. For example, a seller will need a money order when he sells a house or a vehicle. a deal includes a high selling price or the seller’s beliefs may be difficult to collect. For example, a seller will need a money order when he sells a house or a vehicle.

Key differences

  1. A money order is a paper or printed record, like a check, used to make payments, and a bank draft is a means of payment whose funds are insured by your financial establishment.
  2. The financial institution or authorized body issues the money order. On the other hand, in the case of a bank draft, the bank issues it.
  3. Some money orders require a signature. While for a bank draft, no signature is required.
  4. Money orders can also be deposited into a bank account, free of charge; on the other hand, banks charge a lower fee per wire transfer.
  5. A money order is much safer than a bank draft.

Final Thought

Money orders are also much easier to obtain than bank drafts, as a payee is required to have an account with the bank, where the draft is issued. The main difference between the two is the amount of cap that can be issued. A money order has a small amount limit, although the amount on a money order can be higher.

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