Kenyans issued fewer money orders last year due to a bigger shift by customers to other digital payment systems and reduced disposable income.
A money order is a secure alternative to cash or a personal cheque, which you can use to send money or pay bills. It works much like a cheque and is usually issued by a banking institution. You can cash or deposit a money order into a bank account.
Money orders are readily accepted and converted to cash and are often used by people without access to a standard checking account. They are an acceptable form of payment for debts, both personal and business. You can buy a money order for a small service fee from most banking institutions.
Data from the Kenya National Bureau of Statistics (KNBS) shows the number of money orders issued last year fell by a third (33.3 percent) from 2022 pointing to a higher uptake of electronic funds transfers, mobile payment applications, and use of credit and debit cards.
Some 4.6 million money order papers were issued last year from 6.9 million in 2022.
Although the issued money orders declined, the number remains high and has been climbing from 1.19 million in 2019 to 3.15 million in 2020 and a high of 9.4 million in 2021.
"The number of money orders issued declined by 33.3 percent from 6,999 thousand in 2022 to 4,668 thousand in 2023," said the statistics bureau.
Despite the decline in their usage, money orders are preferred for their security compared to checks because they don't include personal banking information, such as the bank's account information.
Money orders are purchased upfront with cash, hence a minimal risk of having it bounce after depositing.
In jurisdictions where electronic payment methods are less prevalent, money orders can be a convenient and reliable way to send money and are widely acceptable.
Money orders are issued by the post office or banks. Some international payment service providers charge from as low as 1 percent of the sum value of a money order while others charge up to 8 percent of the principal amount.
The KNBS data shows that overall postal and courier services output rose by 36.1 percent from Sh19.9 billion in 2022 to Sh27.1 billion in 2023 attributed to outgoing courier packages from 4,733 to 5,215 in the period under review and an increase in registered and insured items posted.
