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Seven percent of Americans do not use a checking account, according to a 2015 survey by the Federal Deposit Insurance Corporation, or FDIC. For businesses that want to reach this market segment or broaden payment options without the risk of taking personal checks, money orders offer one way to branch out. USPS, or postal, money orders feature built-in security features that will help you spot fraud while allowing you to cash the money order or deposit it in your bank account.
Accepting Money Orders
Before accepting money orders for your business, review the security features of money orders offered by major providers, such as MoneyGram, Western Union and the USPS. Postal money orders feature watermarks of Benjamin Franklin repeated on the left side of the order's face, and a multicolored thread featuring the USPS acronym runs vertical to the right of the watermark. Other security tips include making sure the dollar amount is printed twice, has not been erased, and is less than $1,000 for a domestic money order. Avoid providing a good or service until you have either cashed a money order or verified it is authentic.
Cashing a Money Order at the USPS
Money orders can be cashed at any USPS counter, but access to the service depends on the cash available at the facility. A cash drawer at a post office in a small town may not feature the reserves necessary to cash a $1,000 money order but could process a $100 transaction. Always ask first before endorsing your money order with a signature, as you must sign it in front of the postal worker cashing it. Be prepared to show a photo identification if the money order is in your name, or business documents if it's addressed to your company. Sign with both the business name and your name and title.
Alternate Deposit and Cashing Locations
When your primary goal is to have access to the funds provided by the money order versus actual cash, consider depositing the money order in your bank account. Many banks offer same-day access to the funds while others require a waiting period. Your bank may also require you to have a business account if your money order is made out to your business. Banks and money kiosks at retailers and grocery stores also offer money order cashing services for either a flat or percentage fee, such as 5 percent of the money order's value.
Give Instructions to Buyers
Crafting a money order policy for buyers can help streamline the cashing and deposit process for your business. If you don't have a business checking account, ask buyers to address the money order to you or to you in care of your business. A note regarding the business purpose can be left on the memo line provided on USPS money orders. Include in the policy any holding or processing time required for a money order before goods or services are provided.
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- USPS.com: 500 Additional Services
- FDIC: Speeches and Testimony
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Ashley Mott has 12 years of small business management experience and a BSBA in accounting from Columbia. She is a full-time government and public safety reporter for Gannett.