Exactly How Do Money Orders Work?

If you’re looking for an alternative way to send money, pay for something, or pay a bill, you might be asking yourself, “How do money orders work?”


Well, money orders are sort of a combination of a check and a money transfer. They used to be more widely used prior to the days of online banking and iPhones, but they still have a place.

Let’s take a look at what they are, and how they work.

how do money orders work

How Do Money Orders Work?

Let’s say you want to send money to someone. This could be a person or a business, for any number of reasons. You can send money across town or across the world with a money order.

First, you go to a place the offers them, or an issuer. This could be a national chain like the Western Union.

Or, you can also get them at places like banks, credit unions, payday loan/ check cashing businesses, and even some convenience stores or Wal-Mart.

Next, you will provide the money you want to send to the issuer by cash or credit/debit card. You will also have to provide certain information to the issuer so they can send the money to the right place.

This includes:

  • Pay to the Order Of: The name of the person or business your money order is going to
  • From: This is your name. This field may also be labeled “Purchaser, Sender, or Remitter”
  • Signature: Your signature
  • Addresses: Purchaser’s address is where you write in your address. If there is a second address field, that’s for the address of the person/ company you’re sending to
  • Memo: You can leave this blank, but if you’re sending to a business or paying a bill, you may need to include an account number or invoice number

Next, the issuer transfers the money and your recipient should get the funds quickly. Usually the same business day, or the very next day.

When Would I Use a Money Order?

As we mentioned, mobile banking apps have made it easy to pay bills online and send money in a few quick taps. But, what if you don’t have a checking account?

Over 9 million households (not individuals, households) were unbanked in 2015, which means they have no bank account. Some people don’t have bank accounts because they don’t want to pay fees, or some just simply don’t trust banks.

These people still need to send money to buy things and pay bills. And money orders provide a way to do that.

Also, about 64% of Americans aged 16 to 36 do not own a credit card. But they still need a way to send money or pay bills in a hurry sometimes. In that regard, Millennials are ironically keeping this old paper system going.

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