Difference Between Money Order Vs Bank Draft?

Introduction 

Comparisons between money orders and bank drafts are important for people to make when selecting a method of transferring money. Both of these basic payment mechanisms appear to be comparable yet, there are distinctions between them. 

One type of security method that is used for significant payments is a bank draft. Following the first withdrawal of funds from the payer’s account, the bank then issues it. A money order is a document that is issued by a financial bank and is utilized by the payee to establish a deadline for payment. Small payments up to one thousand dollars can be made via money orders.

What is a Money Order?

To enable the payee to receive payments, the bank may issue a money order, which is a physical payment method. Small payments up to $1000 can be made using them. You can withdraw funds from the bank or buy a money order with cash, a debit card, or a credit card. 

Since the payee does not need a checking account to receive payments, money orders are a practical way to transmit money. You should check with the retailer, though, since some money orders have expiration dates and others do not. 

The following are important details about money orders:

• Security: To guard against fraud, money orders include extra security elements.
• Restrictions: Generally, a money order can only be issued for a certain sum.
• Fees: Depending on where you acquire it, there may be a cost associated with purchasing a money order.
• Receipts: A detachable receipt serves as proof of purchase when you buy a money order.

What is a Bank Draft?

Large payments are typically made by people via bank drafts. They are typical in estate settlements and real estate transactions. Because the payer may make purchases with bank drafts without taking money out of their account, they are secure. 

If you would like to pay using a bank draft, you will first request your financial institution. The bank then verifies that you have enough money in your account. 

After that, the bank takes the funds out of your account and puts them in a reserve account. A bank draft for the same amount will be mailed to you must show it to the payee. 

Among the main characteristics of bank drafts are:

• Trustworthiness: The draft is seen as a more safe method of payment than personal checks because it is issued by the bank.
• Higher limits: Bank drafts are better suited for high-value transactions since they may be made out for higher sums.
• Availability: Only banks or other financial organizations offer bank drafts.
• Fees: Depending on the bank and the customer’s account status, there may be a cost to get a bank draft.

Difference Between a Money Order and vs Bank Draft?

Since there is no monetary exchange involved, these two payment systems appear to be comparable, yet they differ in a few respects. A bank draft, for instance, is exclusively available from banks or other financial organizations. 

Since they are bought with cash over the counter, it is different from money orders. A money order can be purchased from a bank, post office, or authorized retailer, among other authorized establishments. Because the payment document includes the payee’s information, such as their bank account number, bank drafts are less secure than money orders. However, money orders don’t include any personal data.

Compared to bank drafts, money orders are easier to get. No evidence that you have sufficient funds in the account is required, and you can purchase them from banks that have been approved. Conversely, your bank is the only place you can buy a bank draft. The bank first makes sure you have enough money and moves it to a reserve account before issuing the bank draft.

Alternative to Money Order and Bank Draft. 

Making use of a mobile payment service such as TangoPay is an alternate method for sending money across international borders. This method of payment combines the convenience of digital payment with the simplicity of use of a money order. The individual who is receiving the money transfer has the option of either picking it up in person or having it transferred to their mobile wallet or online bank account. When compared to money orders, the payment is performed online, which is a significantly more convenient option.

Final Thoughts 

Bank drafts and money orders are both reliable ways to guarantee safe and secure payments. The amount you must transfer, where you want to receive it, and whether or not you have a bank account should all be taken into consideration while making your choice. Knowing the unique characteristics of these tools will enable you to make the greatest decision for your needs, just as when selecting the finest banking solutions. Additionally, services like TangoPay provide a quick and simple option with just a few clicks if you’re searching for an even faster and more comfortable way to safely transfer money internationally.