The world is getting smaller, and not just because viruses and bacteria from foreign countries are showing up here. We can buy something made halfway around the world and have it on our doorstep in a few days. We can also instantaneously send across national boundaries not only information, but money as well.  

One way to send money abroad is through international money transfers. It’s a hot market, growing between 3 percent and 11 percent annually from 2010 to 2014, our recent audit report noted. And the United States is the number one sender of international money transfers, capturing 22 percent of the global market. In 2014 alone, U.S. residents sent $130 billion in money transfers to other countries.

Yet the U.S. Postal Service finds itself in the not-so-hot part of the market, continuing to offer primarily an old-fashioned version of international money transfers: the international paper money order (IPMO). The Postal Service has agreements with 27 foreign countries to accept and cash their money orders in the United States and those countries accept Postal Service money orders issued to recipients in their countries.

IPMO sales have declined drastically, from $60 million worth of money orders in fiscal year (FY) 2010 to $34 million worth in FY 2015, our report said. Sales reflect the face value of the money order, not the revenues earned on fees, which of course also decline with fewer sales. In FY 2015, the program generated only $500,000 in revenue from the fees on money orders. The decline certainly isn’t unanticipated. We have been seeing the same situation in the Postal Service’s domestic money order business.

Both markets face competition from providers that offer alternatives and broad shifts toward electronic forms of payment. Even the Postal Service’s limited electronic international money transfer service (Sure Money), available from the U.S. to 10 Latin American countries, has not performed well in recent years, failing to capitalize on the strong demand worldwide for international money transfer services.

We recommended the Postal Service remake its international paper money order program into an enhanced electronic international money transfer services program and improve the domestic money order program by adding digital technologies.

Tell us what you think. Do you use international money transfer services? Have you used an international paper money order in the past year? What ways could the Postal Service improve its money order services?

Comments (6)

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  • anon

    This is a great topic. I have recently run into frustration while trying to send money internationally to clients in Serbia. Traditional wire transfers are often nightmarishly complex (for instance, I've experienced having bank staff act impatient towards me when I did not immediately understand the difference between IBAN/BIN/SWIFT, etc.) for the average human without a college degree in finance. Also, the fees can range from $20 to as much as a whopping $60! And that is just the outgoing fees associated with the US citizen's financial institution; there are typically additional fees from the receiving party's institution and/or exchange of currency fees, which further cuts into expenses/profits. By comparison, USPS money orders are a great value! Even International ones! I love that they can be replaced if lost or stolen, and also that they theoretically should never expire! Now, back to the traditional wire transfer methods; for smaller bank-based transfers, the fees can be prohibitively expensive, and with instant-payment methods, including MoneyGram and Western Union, security can be an issue, not to mention the very steep fees(~10%!). Also, a bank-issued "cashier's check," which is preferred in many place here in the US, cannot be deposited overseas, especially since there are no common banks or financial institutions in some countries, like Serbia for instance. Also, cashier's checks often are only issued for amounts greater than $1000, and since they require the remitter's and payee's information to be printed on said cashier's check, or rather "bank check," they offer users less flexibility. But since typical cashier's check issued at a bank are not usable overseas, it is a mute issue. One last form of payment which is popular in the US - reloadable credit cards - is not feasible for use overseas, due I think because money-laundering issues and the Patriot Act. But even if Visa "Vanilla" cards could be bought and loaded in the US, and then sent overseas, the risk associated is high, and the fees are steep with this method as well (~5%+?). Often a delay is not an issue, and so in these cases, a traditional paper money order sent through international mail would suffice (ignoring, perhaps, the small lost opportunity cost). Problem here is that it is often hard for some overseas clients to find a nearby MoneyGram / Western Union location to cash said money orders. USPS-issued money order are more secure and more trusted in the world of finance than MoneyGram-brand ones which expires after 90 days. I think the real problem here is NOT that international money order are outdated, but rather it is the fact that these money orders simply are not available in MORE - and better yet ALL - countries. It is disappointing that USPS International Money Orders are not yet accepted yet in Serbia, but they are accepted in neighboring Albania; hopefully the First Lady Melania can help correct this issue since her native Slovenia was part of former Yugoslavia and a major part of the Balkans region. The USPS and Serbia's Postal Service need to work together in order to fix this lost opportunity.

    Mar 03, 2017
  • anon

    Paper money order doesnÔÇÖt quite come to mind If I wanted to make an international money transfer. The fees charged by other operators are shockingly high, but the speed and reliability of digital services canÔÇÖt be beat. USPS should explore the idea of shifting towards a digital strategy and globalize postal money transfers. UPUÔÇÖs International Financial System already provides an entry-level foundation for postal payment services. The IFS provides a postal money transfer platform based on the speed of service. A ÔÇ£normalÔÇØ transfer requires 2 days for completion, an ÔÇ£expressÔÇØ service takes 1 day and the ÔÇ£urgentÔÇØ transfer only 30 minutes. USPS could incorporate similar services at retail locations and through usps.com. A retail customer can still receive a hard-copy money order as ÔÇ£certified proofÔÇØ for the sender, while the online customer can opt to print one for themselves. USPS should be able to engage in upgrading postal money order transfers with determination and without special legislation.

    Aug 11, 2016
  • anon

    Money transfer is a big private sector business, it is very competitive and requires increasing levels of sophisticated compliance, esp around counter-terrorist financing. With a very very outdated product, the USPS is effectively not in this business and the cost of entry is very high. One can use their computer or a mobile phone to send money these days, from an account to an account. The big players still have a cash-in network of corner stores but the new entries have different models, are entirely online and are gaining ground in many corridors. I'd rethink the business cases without presuppositions.

    Aug 10, 2016
  • anon

    Using a modern technological way to transfer international funds is what the Postal Service needs. Paper transfer is outdated and will not keep up with banks and check cashing services in this arena. Go back to the drawing board and rethink this one.

    Aug 09, 2016
  • anon

    I believe the International Money order market is a great way to get international exposure for the Postal Service. From my experience I feel if we link the serial numbers with a dollar amount, it will save us a ton of money more than generating it. We are losing more than a million dollars to fraudulent money orders each week. Lets solve that issue first then expand internationally. I can help all you have to do is ask... thanks.

    Aug 08, 2016
  • anon

    The Postal Serice must up the technology for its domestic Nd international money order program. Far too many competitors are providing up to date technology while we lag further and further behind.

    Aug 08, 2016

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