Dubai: With the new-age ability to send and receive money through a mobile application or pay with a contactless credit card, when would you ever need to use age-old remittance avenues like a money order or a cashier’s cheque? The reality is some still use them and UAE banking experts reveal why.
“Money orders and cashier’s cheques may no longer be common forms of payment nowadays, but they still serve an important need – one not easily duplicated by other forms of payment,” explained Joseph Paul, an Abu Dhabi banker with over two decades experience in customer advisory services.
“Cashier's cheques and money orders are considered to be safer forms of payment compared to personal cheques, but that also depends and differs in terms of where you can buy them, what they cost, and when it makes sense to use one over the other.”
I personally feel cashier's cheques are more secure, particularly when making a large payments for a property. It’s a habit passed down my father who worked in real estate too
How cashier's cheques can still prove useful to you
With cashier's cheques, the bank takes the money from your savings account and puts it in its own account when you purchase a cashier's cheque. The bank then writes out a cheque to the person or business you want to pay. You’ll typically pay a fee to the bank for a cashier’s cheque to the bank.
“A consistent upside of using a cashier’s cheque to pay or to receive payment in place of cash is the fact that the bank guarantees the cheque and this removes any risk to the lender of the cheque getting bounced. So whoever you want to pay is guaranteed to receive the money,” added Paul.
“So as cashier's cheques, commonly referred to as manager's cheques in the UAE, are always guaranteed by the bank, it stays a convenient, secure and reliable way to pay large amounts of money relatively quickly as it does not go through the regular cheque clearing process.”
Are money orders safer than personally-issued cheques?
When purchasing a money order, you must provide the name of the cash recipient, with the issuing bank’s name on the order. Having both pieces of information printed on a money order makes it difficult for anyone other than the payee to cash it. This makes money orders safer than cash.
“Like cashier’s cheques, you’ll pay a fee for a money order, but it's usually inexpensive,” explained Anil Pillai, a Dubai-based banking analyst. “Money orders are easier to buy, but cashier’s cheques are more secure. Money orders also have limits, so they’re more suitable for smaller payments.
“While you can use a money order if you don’t want to use cash or write a personal cheque to pay someone, just make sure to keep your receipt, so you can track and recover funds if your money order is lost or stolen.”
On the other hand, with cashier's cheques, whoever you want to pay is guaranteed to receive the money. And you don’t have to worry about any ‘overdraft’, i.e. penalties for non-sufficient funds that can be charged when you don’t have enough money in your account to cover a check.
Do UAE residents use cashier’s cheques, money orders?
Jaison Wilson, 38, a UAE expat working as a real estate broker, said cashier’s cheques are a better choice for him. “I personally feel it is more secure, particularly when making a large payments for a property. It’s a habit passed down my father who worked in real estate too,” he added.
For another Dubai resident and full-time nurse Rebecca Gifford, 45, money orders are a thing of the past. “I recall using them a lot more frequently until maybe five years ago when I was moving to different countries for work. It helped as money orders didn’t require the need for a bank account.
“However, now I don’t find much use for money orders as e-banking apps offer me a more convenient alternative and although such ease comes at a higher cost, I feel it’s affordable for me and easier to shell out a little bit more money compared to any other forms of remittances.”
While they may seem quaint in a world full of digital payment options, money orders and cashier’s cheques can still offer a low-cost option for those conscious of ever increasing bank fees and other related remittance costs.
“Often times, especially for much larger transactions, cashier’s cheque may be your only payment option as the lender may require you to get a cashier’s cheque to pay what you owe during closing if you're buying a home,” added Pillai.
“Also, while money orders may not be your go-to way to pay, if you need a guaranteed form of payment, they are still available and offer a cheaper alternative, and because of their usefulness as a secure payment method, it means they can be a savvy choice for transactions.”
However, keep in mind that paying an additional fee for money orders or cashier’s cheque once in a while may not make a big difference in your budget, but financial planners reiterate that the costs can add up quickly if you rely on money orders to make regular payments.