How to Make And Accept Payments With Money Orders

Financial transaction at customer service desk, handing a money order over
••• YinYang / Getty Images

Money orders are printed documents that you can use for payments. They look similar to checks, but they’re different: You buy a money order by prepaying the amount printed on the money order. Then, all you need to do is fill in a few pieces of information. The process of using a money order is easy after you do it a few times, and we’ll cover the basics below.

Money orders are safer than cash when you pay by mail: You can track them or cancel them, and they’re “made out” to a particular recipient. A lost or stolen money order is less problematic than losing cash.

Sellers (or whoever you’re paying) may also prefer to receive money orders. When they’re not fakes, money orders are a form of “guaranteed” payment. Plus, they can be less expensive for recipients than credit cards, and they may even be a better option than payment apps in some situations.

For more background information, see How Money Orders Work.

How to Use a Money Order

If you’re familiar with writing a check, filling out a money order is similar. You just need to purchase the money order first. If this is all new to you, we’ll break it down step by step. Finally, we’ll cover how to deposit or cash a money order you receive.

1. Buy the Money Order

Payment: The first step is to buy a money order for the amount you need. For example, if you need to pay somebody $100, you need to buy a money order issued for $100. You typically need to pay for money orders with cash, a debit card, or a credit card cash advance. Be prepared to cover your payment amount plus fees.

Where to purchase: You have several options. Convenience and cost may dictate where you buy. Banks and credit unions often charge $5 or more per money order, but other vendors usually charge around $1. The United States Postal Service charges up to $1.75 in 2020.

Places to buy include:

  • Convenience stores
  • Grocery stores (the Customer Service desk)
  • US Post Offices
  • Pharmacies
  • Check cashing and money transfer stores
  • Banks and credit unions

Fees: Except for banks, most places charge $1 to $2 for money orders up to $1,000. Money orders have maximum limits (typically $1,000 for domestic and $700 for international), so you need to buy multiple money orders if you’re paying more than the maximum. For large purchases, a cashier’s check might be a better option.

Keep your receipt: Hold on to any confirmation materials you get with your money order. If the payment goes missing, you can track it to find out if anybody cashed or deposited the money order. 

When problems arise, it’s easier to cancel and get another one reissued if you have your receipt handy.

2. Fill it Out

The amount of your money order will be printed on the document when you buy. However, you need to provide additional information and sign the money order before you’re finished.

Payee information: Write the name of the person or business you’re paying in the area that says “Pay to the order of” (or something similar). Ask the recipient if you’re not sure what name to write here.

Addresses: Some money orders ask for the address of the recipient (and they might ask for your address as well). This information helps ensure that the money order gets to the recipient and makes tracking easier. However, this is not the most important part of a money order, and your recipient might not care if you use actual addresses.

Memo: Money orders may provide an area labeled “Memo” or “Re:” for additional details about your payment (your account number or order confirmation, for example). If you can’t find that area, you can write anything needed in any blank section on the front of the money order. A sticky note on the money order might also do the trick.

Signature: Your signature is required at the bottom of the money order. Simply sign your name on the front (not the back) of the document. This area might be labeled "Signature," "Purchaser," or "Drawer.” For more details, see How to Fill Out a Money Order.

3. Make your Payment

Once you fill out your money order, it’s time to pay. Unlike cash, it’s safe to mail money orders — just be sure to keep a copy of your receipt. Money orders are also useful for in-person payments.

Cashing or Depositing a Money Order

If you receive a money order, you can deposit or cash it like a check. The easiest thing to do is probably to deposit the payment in your bank.

Make a deposit: Endorse the back and take the money order to a branch or ATM. Mobile deposit might also be an option, but some banks prohibit mobile deposits of money orders. Funds should be available within a few days, and you can spend the money out of your checking account.

Get cash: You can also cash money orders if you want the funds immediately. However, your bank (or any bank) might not give you the full amount immediately. If you need the entire amount, you’ll need to go to the money order issuer (a Western Union desk, MoneyGram location, or a US Post Office, for example). 

Even if you visit an office of the money order issuer, that particular location might not be willing or able to cash your money order — so call ahead and ask.

Watch for scams: Money orders might be fake. If somebody pays you with a money order, don't send money or provide goods until you're certain that the payment is legitimate. Money orders are a favorite tool for con artists who use them with strategies similar to cashier's check scams.

For more details, see How to Cash a Money Order.

Alternatives to Money Orders

Money orders have their benefits, but other options may be better. Instead of traveling to a money order issuer, waiting in line, and paying a fee for every money order you need, you might be better off paying from a bank account. Ask the seller what forms of payment are acceptable.

  • Personal checks are a valid form of payment in many places.
  • Automatic electronic payments are even easier for recurring bills.
  • For one time purchases, your debit card may be an option. But for more security, use a credit card online — especially if you’re not familiar with the retailer.
  • Payment apps may work for person-to-person payments, but be careful of scams.

Paying with a money order is similar to paying by check. But you need to purchase money orders, and they may have limits. Be sure to keep your receipt, and evaluate alternative ways to pay.

Article Sources

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  4. U.S. Bank. "Consumer Pricing Information," Page 7. Accessed Feb. 18, 2020.

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  8. Florence Bank. "mRDC Terms and Conditions." Accessed Feb. 16, 2020.

  9. MoneyGram. "Money Orders." Accessed Feb. 18, 2020.

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  12. Federal Trade Commission Consumer Information. "Mobile Payment Apps: How to Avoid a Scam When You Use One." Accessed Feb. 18, 2020.