Federal Manager's Daily Report

The Postal Service could recapture some of the market share it has lost in recent years in its money order line of business, an IG report has said, noting that while USPS processes orders worth $21 billion a year, the number sold is down by 60 percent from the 2000 peak.

Money orders, essentially prepaid checks, date to the Civil War—when they began as a safe way for Union soldiers to send money home—but like many postal services they have suffered from the rise of alternatives in recent years, the report said. However, they are “one of the Postal Service’s more profitable products, with an average profit margin of 35 percent.”


Steps to be considered include selling the money orders online and either printing and distributing them from a central facility or creating a fully electronic money order, which many foreign post offices already offer. “Customers could use such a product to pay bills, make person-to-person payments, or make ecommerce purchases. In addition, electronic money orders could have significant appeal for online merchants, reducing their payment processing costs,” it said.

Other benefits would include driving more traffic to post offices—one in 10 retail revenue transactions at them involve a money order and among the 1,000 locations with the highest money order volume, a quarter of transactions include a money order.

Numerous proposals are in circulation to boost the Postal Service’s role as a financial institution, especially in communities where there is little traditional banking, with its money order line of business cited as an existing precedent.