Money order
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Money Order in the U.S.
Image:Money order.jpg In the United States, a money order is a type of check intended to provide a safe alternative to sending cash (in the mail). Money orders are typically sold by third parties such as the Postal Service, grocery stores, convenience stores, and financial service companies such as banks.
A money order as purchased by a presenter typically consists of two portions: the negotiable check for remittance to the creditor, and a receipt the customer retains for his records. The amount is imprinted by machine or checkwriter on both portions, and similar documentation, either as a third hard copy or in electronic form, is retained at the issuer and agent locations.
A money order is purchased for the amount desired. In this way it is similar to a certified check. The main difference is that money orders are usually limited in face value to some specified figure (for example, $1,000 for Postal money orders as of February, 2006) while certified checks are not.
One of the reasons for the growing popularity of money orders is that, unlike a personal bank check, they are pre-paid and therefore cannot bounce. The only hypothetical reasons a money order could ever bounce are if the payment is stopped by the maker of the money order, if the issuing company goes bankrupt, or if the money order is fraudulent or counterfeit.
Money orders are generally considered safer for payments from parties unknown to the payee, as opposed to a personal check drawn on the maker's bank account. This is mainly because money orders are unlikely to bounce due to insufficient funds, since a money order is drawn on a bank's funds rather than on an individual's bank account like a personal check is. And while an individual's checking account balance is susceptible to running out due to personal whims and incompetencies, a banking institution's funds generally are not. In recent years, partly for this reason, money orders have become a preferred method of payment by sellers of goods over the Internet, but are rapidly being replaced by electronic transfer services (such as PayPal) as the most popular method.
On the other hand, recently (2006) there has been a significant increase in sightings of counterfeit postal money orders. Often, such a counterfeit will be sent to an unwitting victim who is instructed, on some pretext, to deposit it at his bank and return some of the funds. The victim is more likely to trust an "official" money order than a regular check, for the reasons given above. However, because money orders are paid through the postal service rather than the usual check clearing system, they often take longer to "bounce" than an ordinary check. When this finally occurs it is charged back to the victim, who unfortunately may already have sent back the funds, for which he or she must take the loss. For this reason banks are now applying increased scrutiny to incoming money orders, and are becoming more reluctant to accept them. A safer approach is to cash them at a post office. In this case, the authenticity of the item is immediately determined, and if deemed good, the holder is paid and absolved of further responsibility for the funds.
Security features of U.S. Postal Money Orders
- PMOs are generally regarded as one of the more difficult financial documents to counterfeit
- Watermarks. Telltale watermark when held up to the light should reveal images of Benjamin Franklin, repeated on the left side (top to bottom)
- Dark security strip running alongside the watermark (top to bottom), just to the right. If held to the light, a microfiber strip will show tiny letters "USPS" along its length, facing backward and forward.
- Rainbow of inked patterns and tones.
- PMOs are printed on crisp, clean, textured paper stock.
- Maximum value of $1000 for domestic (US) postal money orders, and $700 for International Postal Money Orders.
- Denominations appear in two locations. If the denomination amounts are discolored, that indicates that they have been erased.
- Ultra-Violet features include the above mentioned micro-fiber strip that glows red, and the PMO number on the reverse side and the bottom which will also appear red under UV light.
- Postal Money Orders are NEVER sequentially numbered, which is common with counterfeit
International Money Order
An international money order is very similar in many aspects to a regular money order except that it can be used to make payments abroad. With it, a buyer can easily pay a seller for goods or services if he or she resides in another country. International money orders are often issued by a buyer's bank and bought in the currency that the seller accepts. International money orders are thought to be safer than sending currency through the post because there are various forms of identification required in order to cash an international money order often including a signature, and a form of photo identification.
Money Orders in India
In India, a Money Order is a service provided by the Indian Postal Service. A payer who wants to send money to a payee pays the amount and a small commission at a post office and receives a receipt for the same. The amount is then delivered as cash to the payee after a few days by a postal employee, at the address specified by the payer. A receipt from the payee is collected and delivered back to the payer at his address. This is more reliable and safer than sending cash in the mail.
It is commonly used for transferring funds to a payee who is in a remote, rural area, where banks may not be conveniently accessible or where many people may not use a bank account at all.