Money Orders and Bank Drafts

Money Orders and Bank Drafts are payment orders for pre-determined amount of money. Both money orders and bank drafts are used to pay money to a third party. Bank drafts and money orders are more secure way of payment compared to personal or business cheques, because they require that the amount specified on them is pre-paid. This way the person/business receiving payment won't have problems with bounced cheques, etc. All major Canadian banks issue both bank drafts and money orders.

Money Orders

Money orders can be issued in postal office (postal money order) and in a bank (bank money order). In Canada, the postal money order is a money order issued and guaranteed by Canada Post, used to pay a specific amount of money to a third party specified on the money order. The postal money orders in Canada can be purchased in Canadian Dollars, US dollars and British Pounds. They can be used to transfer money in both Canada and abroad. The maximum value of a Canadian postal money order is $999.99 CAD and USD and £100.00. The cost of a Canadian postal money order is between $4.50 and $7.00 depending on the currency and the destination of the money order.

Banks also issue money orders, whenever the amount of the payment is less than $1,000 CAD. Bank drafts usually cost between $4 and $6 CAD depending on the bank.

Bank Drafts

Bank drafts are known by many names like cashier's cheque, bank check, and teller's check. Bank drafts are guaranteed by a bank and have the same liquidity as cash in general. Canadian banks issue bank drafts for amounts greater than $1,000 CAD. The cost of a bank draft is similar to the cost of a bank money order.

Why use Money Orders and Bank Drafts?

Bank Drafts and Money Orders are convenient and safe payment methods. They are more secure than cash because they can be cashed by the person/business whose name is on the money order/bank draft only and they can be replaced in some cases if stolen or lost.