HomeBankingWhat Is a Money Order and How Does It Work

What Is a Money Order and How Does It Work

A Money Order is a certificate similar to U.S. currency purchased from a bank, post office, or participating store. The recipient’s name (payee) is filled out, so it is not cashed by anyone else. Money orders are used in place of a personal check because they are beneficial to both the purchaser and payee. 

  • Payee wants a guaranteed payment, unlike a personal check which is not guaranteed to have funds available.
  • The purchaser wants a record of their payment, which cash does not offer. 
  • Money orders provide security because you can cancel them if it’s lost or stolen.

Money orders are purchased from post offices and participating stores for a small fee of $0.50-$2.00. 

History of Money Order

The U.S. postal service first issued money orders in 1864 as a secure alternative to cash used to pay for items. Money orders are guaranteed payments that can be cashed or deposited into a bank account. Money orders were created as a secure way to send payments through the mail because they can be canceled if lost or stolen. 

Stores and banks would not accept a check from an unknown person or institution because there was no guarantee that the money would be available when they attempted to cash it. Money orders solved this issue so someone in a town they were not known could purchase a money order with cash and sign it over to the store or person as a guaranteed payment. 

Money orders have many of the benefits of cash and checks. Money orders are not attached to a bank account and are purchased from the Post office, grocery stores, and convenience stores that list money orders as a service provided. 

How A Money Order Works

Money orders are a form of payment convenient for the purchaser and payee, so we will cover buying and filling out a money order and what to do if you receive one as payment.

Paying With a Money Order

When you have chosen to use a money order, you will first need to find somewhere that sells them. This includes:

Money orders can cost $1.00 to $3.00, with the lowest fees available at Walmart. A Walmart money order fee will not exceed $1.00, with prices varying by location, while the U.S. Post Office charges a $1.45 fee for $1.00 to $500.00 money orders and a $1.95 fee for $500.01 to $1000.00 money order. 

Once you have decided on where to purchase your money order, you will need cash to buy it unless you have a checking account and your bank has money orders. They will use the funds from your checking account to cover the money order. 

When purchasing a money order, you will tell the retailer or bank the amount you need, and they will give you a certificate similar to a check. The amount you have purchased will be printed on the front of the money order, and depending on the amount, they may have to issue multiple money orders.

The front of the money order is an area where you will fill in the recipient’s name and address, followed by signing your name and address on the specified line. Once filled out, you will detach a receipt along a perforated edge for your records. The receipt will have the amount and money order number, so you have the information needed to stop payment if it is lost. 

Getting Paid With A Money Order 

When you are paid with a money order, you have the option to deposit it like a check into a bank account, or you can cash it. Depending on where the money order is from will impact where you can cash it. When cashing a money order, it must be in your name, and you will need a form of identification.

  • Post Office money orders can be cash at most banks, grocery stores, and post offices.
  • Walmart money orders can be cashed at Walmart.
  • If cashing any other money orders, call a participating location to verify that they cash the money order you were paid.

A money order is a guaranteed alternative to cash and personal check if you complete a transaction with someone you do not know. 

How to Send a Money Order

If you need to send a money order, it can be mailed or hand-delivered. When sending a money order through the mail, it is important to verify that the recipient’s information is correct so they will not have any issues cashing it. Keep the attached receipt that is removed along the perforated edge because this will have the required information if you need to cancel it due to theft or being lost. 

Where Can You Cash a Money Order (List)

Below is a list of Nationwide locations that will cash a money order.

Grocery Stores

  • Walmart
  • Publix
  • Winn Dixie
  • Kroger
  • Safeway


  • Citibank
  • Commerce Bank
  • HSBC
  • SunTrust
  • Bank of America
  • Capital One
  • Chase Bank
  • U.S. Bank
  • Fifth Third Bank

Money Order Issuer

  • U.S. Post Office
  • Money Gram
  • Western Union

Check Cashing Providers

  • Check into Cash
  • Ace Cash Express
  • Money Mart
  • Speedy Loans

How Do You Cash a Money Order (Step by Step Guide)

  1. Bring the money order to a location that you have verified and will cash the money you were given. 
  2. Sign the money order once you are with the store cashier
  3. Verify identity with License or state I.D.
  4. Pay the service fee out of the balance of the money order.
  5. Receive the balance in cash after the service fee is paid.


Money orders are a convenient alternative to checks if you need a guaranteed form of payment that is not cash. Cash can be stolen and lost unlike money orders so which can be traced or canceled if they are lost or stolen. Money orders are convenient and can be purchased and cashed at many locations making them a convenient option if you do not have a bank account.


Do you need a bank account to cash a money order?

You do not need a bank account to cash a money order. There are many options for cashing a money order based on where the money order was purchased. Many grocery stores and the U.S. Post Office will cash a specific type of money order, so call ahead to verify their policy.

Is a money order the same as cash?

Money orders are not the same as cash, but they are a guaranteed form of payment, unlike a check which is not a secured form of payment. So if paid with a money order, you are guaranteed payment in the amount printed on the certificate, but you will have to cash or deposit the money order before accessing the funds. Meanwhile, cash payments you can use as soon as you receive them.

Can anyone cash a money order?

Anyone can cash a money order if the money order is made out to them, and they have a form of identification that matches the information on the money order.

Do you need an I.D. to cash a money order?

When cashing a money order, you will need to have a picture I.D., either a state I.D., driver’s license, Passport, Military I.D., or any other government-issued identification.

Can you tell who cashed the money order?

If you purchased a money order and gave it to a person or business and want to verify who cashed it, you can call the number on the money order receipt. The customer service will need the serial number for the money order, located on the receipt that you detached for your records. Each company may have a different process, so follow instructions and complete any necessary paperwork.

What happens to a money order if it is not cashed?

Money orders do not have a specific amount of time to be deposited or cashed within. They retain their value indefinitely, so if you have received a money order and forgot to cash it, you can still take it to a

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