What is a Money Order?

business economy

If someone needs to pay for something via US Mail and does not want to write a personal check, what does he do? He buys a money order! This method of paying bills is still popular today, and many people prefer a money order to a personal check.

A money order is an instrument that orders a sum of money to be paid to someone else. The buyer goes to a post office, grocery store or even a convenience store, pays for the order in the amount he wishes, along with a fee to the establishment selling it, and sends the order to the person he wants to pay. Because the money order must be paid for in full at the time of purchase, the payee is guaranteed the money will be paid to him.

A money order does not expire, so the payee can cash it at any time. Companies such as Western Union guarantee the funds for a money order, so the buyer does not have to buy the money order and then worry about the money coming out of his checking account unexpectedly some time later. The money order is also popular with those who do not have a bank account. They can pay bills via mail and not worry about sending cash or paying to wire cash to an individual. Anyone with cash in hand can purchase a money order, so there are no age requirements, as there may be for opening a bank account.

The money order system was first formally established in Great Britain in 1792, by a private company. It didn't do very well, and in the mid-1830s the system was taken over by the post office. The trend caught on in the U.S. as a safe way to send money and as a guarantee that the money would be available.

Cashier's checks from a bank are much the same as a money order, but usually involve larger sums of money. Many stores have limits on how much someone can make a money order for. Cashier's checks usually involve amounts of money over $500 or $1,000. They are guaranteed by the issuing bank.

A person should always ask how much the store's fee is to purchase a money order and should be ready with that amount of cash in hand.

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Discuss this Article

i live in the Philippines and i want to buy product on line from the US .my payment would be thru money order and the company provided is only their company address. can i send money order to them though without the name of a person to be sent to but only their address?
- shineon
What if you write a money order out and decide that you don't need to use it, can you get your money back from an already filled out money order?
- anon34180
i live in dubai, i need to by a product from us, i am going to send money by a money order, the us company is giving me only their address, can i send a money order to them?
- anon34133
A tenant claims that he put a money order in my mailbox to pay rent. I did not receive it. He says that he bought it at a convenience store and that he is going to verify if it was cashed. What if they say that it has been? I never received it.
- gmlhschoir
Can I return my money order if I do not need it anymore?
- anon30315
So do I have to fill out a form or something or just send the money???
- anon29858
If someone sends me a money order from another country such as Great Brittan, can I cash it in the U.S.? And if so, where could I cash it? Thanks-Kim12
- kim12
If i am the seller, am i am receiving the money order? Where do i go to cash it in to get the real money. This is in the US by the way. Could you explain that process in detail for me. Thanks!
- anon26051
I mailed a Money Order for $325.00 almost two weeks ago, and she still does not have it. What do I do now? I have verified it has not been cashed. Now what? thanks
- anon24636
A purchase order is issued by a company. It says that the people who have the authority to make purchasing decisions are okaying a purchase. It isn't actually money: it's something that makes the seller more likely to believe that the bill will be paid.

Suppose you want your company to buy you a new laptop. Very often, you'd have to get your boss to sign a request. Either your boss or someone in accounting would then say "OK, thus-and-such laptop, X dollars, to be bought from Anytown Computers." They'd issue a purchase order, and if your company had done business with Anytown before, you could call or email, tell them what you wanted, and give them the purchase order number.

If you just called up out of the blue and said "Hi, I'm with Xyzzy Brothers Corporation, and we need a new laptop. Please send thus-and-such, it's on page 23 of your catalog," they would probably insist on a credit card number.

- rosvicl
Can you please tell me the differences between a purchase-order and a money-order? In which situation will a person prefer these?
- anon20184
Do you need to include the name of the sender on a money order? I want to send someone money anonymously.
- penbod04
I used to buy money orders to buy things on eBay, and I also received them from people buying things from me on eBay.

The commercial money order companies usually have an 800 number on the money order. You can call and confirm that the money order is still good. It is relatively painless to claim a refund on a money order, and from my experience it only takes two or three weeks to get a refund.

- anon17207
to anon12864:

That is a good question. One reason for the use of money orders for people with checking accounts is that often some businesses do not allow personal checks, though they will allow money orders and cashier's checks. This will often be the case at certain apartment complexes (for initial move-in fees or late payments) and such. The people who give you these money orders may be assuming that you will not take personal checks, or they may be paying this way out of habit. Perhaps most of the people with whom they do business only accept money orders and they pay you similarly just for convenience. All speculation, but the best I can come up with...

- anon15646
Didn't know they were so inexpensive. Check out the USPS website.
- RJRtimes
Sad to say, sometimes when I can't FIND my checkbook and I need to make a payment, I'll pay with a money order. I've had to do this with my landlord twice. (Yeah, I know... I need better organization!)
- anon14447
I own a small business, and most of my customers pay me with checks. But lately I've had several customers pay me with money orders (even though they have checking accounts), and I can't figure out why.

Money orders are more expensive than checks and they take more time to produce. So why would someone with a checking account choose to pay with a money order? It makes no sense to me.

- anon12864
Do money orders have an expiration date?
- anon12077
to all those asking about cashing U.S. money orders in other countries: as of 2008, you can cash international money orders at post offices in the following countries:

Albania, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bolivia, British Virgin Islands, Canada, Cape Verde, Dominica, Dominican Republic, Ecuador, El Salvador ($500 limit), Grenada, Guinea, Guyana ($500 limit), Honduras, Jamaica, Japan, Mali, Mexico, Montserrat, Peru, St. Christopher (St. Kitts) and Nevis, St. Lucia, St. Vincent and the Grenadines, Sierra Leone, Trinidad and Tobago,

note that these are international money orders and not domestic money orders, so they cost a little more to purchase (something like $4.00), but they work the same way as domestic money orders.

- elsewhen
how i can change a money order?
- anon8529
i want to know how to figure out the Money Order # for a particular MoneyOrder.. thanks
- anon6978
what's the difference between a money order and an international bank draft?
- anon5816
I have the same question as manny77: Can you cash a money order from the US in a foreign country?

- cclark21359
Your statement that "Cashier's checks from a bank are much the same as a money order" is incorrect. A cashier's check is regulated under the Uniform Commercial Code of the State that the Bank is in. Often the bank will not "sell" a cashier's check to non customers. Also if the cashier's check is lost or stolen the purchaser must wait a minimum of 90 days, complete a declaration of loss and other forms before the bank will consider "refusing payment". A money order doesn't have the same conditions...usually much easier for the purchaser to obtain reimbursement.
- anon4959
Can you encash USPS Money Order in other country?
- manny77

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