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What is a Money Order?

Amy Pollick
Updated: Jun 04, 2024

Money orders are financial certificates or notes used in place of cash in order to make a payment. They do not require the person getting them to have a bank or credit account, so they often are the go-to option when a person isn’t affiliated with a financial institution, or when a seller specifically requests payment under this method. These instruments do not have an expiration date but generally are limited to amounts under $1,000. People typically can cash them without a problem unless the notes are from a foreign country, in which case cashing gets expensive. Available from locations such as banks, grocery stores and the U.S. Post Office, they are sometimes linked to money laundering but still are considered a very safe way to get money to someone else.

What It Is

A money order is a financial instrument that allows a person to make a payment to someone else without using cash, checks, credit or other methods. It has a specified recipient, and, like a check, it always includes an indication of how much the recipient is supposed to get. It represents actual money and can be converted to cash easily, so it is considered to be a cash equivalent.


People used these types of financial notes formally for the first time 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.

General Use

In most modern transactions, payment happens through debit or credit cards, or through electronic transfers processed online. People still write checks, but this is becoming less common as the money system becomes more technologically advanced and abstract. A person who gets a money order usually does so because he does not have access to one of these payment methods, which often means he does not hold a bank or credit account.

The fact that anyone with the right amount of cash can buy one of these certificates makes them very popular with teens and young adults. These individuals often haven’t established their own accounts elsewhere, but they still might need to make a payment for which they don’t want to present or send cash. Other adults still use these instruments if they have problems with other payment methods, or if a seller specifically requests a money order.


When a person needs a money order, he goes to a retailer who works with them, such as the U.S. Post Office or a grocery store, and gives the representative the full amount of payment, along with a small processing fee and completed order form. He indicates who the recipient should be at that time. The representative prints the note for the buyer, who then can present or send it to the recipient. It is a good idea to ask ahead of time what the processing fee will be so that the buyer can be sure to bring enough cash to cover the transaction.

Value Limit

Depending on where someone buys a money order, the maximum amount one can be issued for is generally between $500 and $1,000. If a person has to make a payment that’s larger than the limit the issuer has, he can buy more than one note. The downside of doing this is that the issuer will charge him a processing fee for each certificate, not just one, making payment more expensive. Cashier’s checks sometimes are used as an alternative for payments over $500 to $1,000 for this reason.

Guarantee of Payment

A person who buys notes of this type has to pay the amount of the certificate in full at the time of purchase. With payment having already taken place, the buyer is guaranteed to receive the full amount listed. Many companies also put an additional guarantee on the notes they issue. This makes them much safer than sending a cash payment.


An individual who wants to cash a money order has several options available. In general, he can take the certificate to any institution that issues them, such as the post office, and request that it be cashed. These institutions already work with these types of certificates and therefore usually don’t charge to do this. He also may present it to a check cashing service, but these organizations often charge a fee for the service. Someone who has a bank account may opt to deposit it at his local branch as he would a check, as well.

Organizations that cash these financial instruments are concerned about fraud. They usually ask to see the identification of the person cashing the certificate for this reason. Once an agency has verified that the recipient is who he says he is, it usually can proceed with the transaction without further problems.

Issues sometimes arise in cashing this kind of note if it has been issued by a foreign organization. It is sometimes necessary to cash it in the country of origin, change the funds into the proper domestic currency desired and then deposit the funds at a local bank. Going through this process is quite expensive in most cases, so this payment method isn’t ideal for international transactions.


One advantage of these certificates over other payment options is that they do not have an expiration date. This makes them different than checks, which banks no longer are technically obligated to cash after six months, according to the Uniform Commercial Code. Even though these certificates do not expire, people usually cash them fairly quickly, either because doing so is necessary to complete a transaction, or because they are in need of the funds.

Tracing and Fraud

Issuers typically clearly are identified on these certificates. This makes them fairly easy to trace back to the point of purchase. Financial officers cannot always show where the cash used to purchase the instruments came from, however. Combined with the fact that most institutions put limits on how much the note can be issued for, this makes the certificates a way to launder money, because a person can filter cash through money orders purchased through many agencies. Members of law enforcement long have been aware of this problem but have not been able to prevent this type of fraud completely in most areas.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
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Amy Pollick
By Amy Pollick
Amy Pollick, a talented content writer and editor, brings her diverse writing background to her work at SmartCapitalMind. With experience in various roles and numerous articles under her belt, she crafts compelling content that informs and engages readers across various platforms on topics of all levels of complexity.
Discussion Comments
By anon332218 — On Apr 27, 2013

I bought four money orders. Is there a way to get my money back? I wrote the wrong amount on them. Please tell me an easy way to get my money back.

By anon257733 — On Mar 28, 2012

So if I go get a money order because I need to pay someone, can someone else pick it up in another city?

By Kendra Saunders — On Aug 04, 2011

i found an old money order from 2003 and my bank won't cash it. What can i do?

By anon120774 — On Oct 22, 2010

I purchased a money order from Western Union two years ago to pay for legal services. I received mail today and they send it back to me. They said i got overcharged. i don't have the receipt but I have the money order. how can I refund it? --chava968

By anon115745 — On Oct 04, 2010

Can a money order really be traced as an online site says?

By anon106423 — On Aug 25, 2010

how do i pay a money order? do you have to be 18 because I'm way younger. I'm trying to send money to my friend all the way in pennsylvania because she's giving me a webkinz black and white cat. It's so cute but i need to know now!

By anon93619 — On Jul 04, 2010

Do you have to be over 18 to send a money order?

By anon82263 — On May 05, 2010

Why should a bank charge 10.00 for a cashiers check even though you are a customer of theirs. I can obtain a money order for only 1.10. That's a big difference.

By anon68299 — On Mar 01, 2010

Can a second party cash a money order already signed by the recipient of said money order?

By anon66271 — On Feb 18, 2010

I am the recipient (payee) of a Western Union money order dated September 2008 that I just discovered while going through some old mail.

I no longer know where the purchaser lives or how to contact the person. I have called Western Union twice, and told that the Consumer Service Affidavit is the form that I need to fill out, have notarized, and mail back.

However, on the WU site, I can only find the one they have for the Purchaser. I have called WU twice, have been told about the charges levied against the original amount since date of purchase, etc., but no has given me a correct answer regarding what to do for the recipient of a money order that someone sent me 17 months ago. Could you kindly assist me? Thank you.

By anon36525 — On Jul 13, 2009

hi. where do i get the money order because i want to pay for my studies?

By shineon — On Jun 29, 2009

i live in the Philippines and i want to buy product on line from the US .my payment would be through 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?

By anon34180 — On Jun 18, 2009

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?

By anon34133 — On Jun 17, 2009

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?

By gmlhschoir — On May 17, 2009

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.

By anon30315 — On Apr 16, 2009

Can I return my money order if I do not need it anymore?

By anon29858 — On Apr 09, 2009

So do I have to fill out a form or something or just send the money???

By kim12 — On Apr 06, 2009

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

By anon26051 — On Feb 07, 2009

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!

By anon24636 — On Jan 15, 2009

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

By rosvicl — On Jan 13, 2009

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.

By anon20184 — On Oct 27, 2008

Can you please tell me the differences between a purchase-order and a money-order? In which situation will a person prefer these?

By penbod04 — On Sep 29, 2008

Do you need to include the name of the sender on a money order? I want to send someone money anonymously.

By anon17207 — On Aug 24, 2008

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.

By anon15646 — On Jul 17, 2008

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...

By RJRtimes — On Jul 15, 2008

Didn't know they were so inexpensive. Check out the USPS website.

By anon14447 — On Jun 17, 2008

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!)

By anon12864 — On May 14, 2008

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.

By anon12077 — On Apr 29, 2008

Do money orders have an expiration date?

By elsewhen — On Mar 15, 2008

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.

By anon8529 — On Feb 15, 2008

how i can change a money order?

By anon6978 — On Jan 14, 2008

i want to know how to figure out the Money Order # for a particular MoneyOrder.. thanks

By anon5816 — On Dec 06, 2007

what's the difference between a money order and an international bank draft?

By cclark21359 — On Dec 01, 2007

I have the same question as manny77: Can you cash a money order from the US in a foreign country?

By anon4959 — On Nov 07, 2007

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.

By manny77 — On Apr 25, 2007

Can you encash USPS Money Order in other country?

Amy Pollick
Amy Pollick
Amy Pollick, a talented content writer and editor, brings her diverse writing background to her work at SmartCapitalMind...
Learn more
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