Prior to 1880, transmission of money was undertaken by Government Treasuries. But Post Office net work being much wider than the Government Treasuries this function naturally devolved on to Post Office Department. The Money Order Service was started on 1st January, 1880 and to this day it has been the chief mode of remittance of moderate sums of money notwithstanding the increasingly stiff competition posed by the commercial banks.
Postal money order has had its share of evolution. Initially, the amount remitted through money order was collected by the payee from the post office. The maximum amount that could be sent through a single money order was fixed at Rs. 150/- only. From 1st October, 1884, payment was arranged to be made to the payee at his door step. Almost simultaneously telegraphic money order service was also introduced. In 1889, the maximum limit of amount that could be remitted by a money order was raised from Rs. 150/- to Rs. 600/- which limit remained unchanged till 1963 when it was further raised to Rs. 1,000/-. in case of remittance received from abroad through commercial banks, however, the limit was set at Rs. 5,000/-.
The commission charged by the Post Office on the money order too has undergone revision from time to time. The last revision was made in July 1979, when the minimum commission for a money order was slightly increased from Paisa 30 (for amounts upto Rs. 20/-) to Paisa 75 for an amount upto Rs. 50/- and to Rs. 1.50 for any amount from Rs. 51/- to Rs. 100/-; for amounts in excess of Rs. 100/- the commission was reduced from Paisa 20 for every Rs. 10/- or part thereof to Paisa 50 for every Rs. 50/- or part thereof. Thus the charge for a money order for the maximum amount of Rs. 1,000/- was reduced from Rs. 20/- to Rs. 10.50. The objective was to encourage remittances of higher amounts through money order.
To commemorate the 100 years of Money Order Service, Pakistan Post Office is issuing one postage stamp of 40 Paisa denomination on the 20th December, 1980.