Money Order Definition: How It Works, Costs, and Cashing

A money order is a prepaid slip of paper that works like a guaranteed check: you pay the face value plus a small fee upfront, name the person or business who should receive the money, and hand or mail it over. Because the issuer already holds your money, a money order can’t bounce the way a personal check can. Fees at the most common sellers run from about $1 to $3.60, and no single money order can be worth more than $1,000.

How the Guarantee Works

When you buy a money order, you give the issuer — a post office, a retailer, a bank, or a credit union — the full face value in cash or on a debit card, plus a fee. The issuer holds that money and promises to pay whoever you write in as the recipient. That prepayment is the whole point. The funds already sit with the issuer before the payee ever tries to cash it, so the payee doesn’t have to trust you, just the issuer.

Every money order carries a unique serial number, printed on the instrument itself and on a detachable receipt stub. For USPS money orders, you can enter that serial number at USPS.com to check whether it has been cashed.¹ The receipt is also the only proof you were ever the buyer, which matters if the money order is lost or stolen.

One thing a money order is not: reversible. USPS states plainly that there are no stop payments on postal money orders, and you can’t track one while it’s in the mail.¹ Once you fill in the payee and drop it in an envelope, you’ve committed the money.

Where to Buy One and What It Costs

You can buy money orders at post offices, banks, credit unions, and many retailers. Fees stay low across the board:

USPS charges $2.55 for money orders up to $500, and $3.60 for $500.01 through $1,000. Military postal money orders cost $0.84.²
Walmart caps the fee at $1 per money order, though the exact charge varies by store.³
Banks and credit unions generally charge $2 to $5, and some waive the fee for account holders.

The face value of a single USPS domestic money order maxes out at $1,000. If you need to send more, you’ll buy multiple money orders and pay a fee on each.¹

Skip the credit card. Most sellers either refuse credit cards outright or process the purchase as a cash advance, which starts accruing interest immediately, adds a fee of roughly 3% to 5%, and earns no rewards. Pay with cash or a debit card.

One boundary worth knowing: USPS stopped selling international postal money orders in October 2024, and foreign postal operators in the remaining participating countries stopped cashing U.S.-issued international money orders on October 1, 2025.⁴ For money going abroad, you’ll need a wire transfer, an international bank transfer, or a remittance service.

Filling One Out

Do this before you leave the counter. A blank money order is essentially cash — anyone who finds it can write in their own name and cash it.

Write the recipient’s full name or business name on the “Pay to the Order of” line, in pen, printed clearly.
Fill in your own name and address in the “Purchaser,” “Sender,” or “From” field.
Sign the front where it says “Purchaser’s signature” (sometimes labeled “drawer” or “signer”). Do not sign the back. That side is for the recipient to endorse when they cash it.
Detach the receipt stub and keep it. It shows the serial number, post office number, and issued amount.

Without the receipt, you cannot look up whether the money order was cashed, request a replacement, or file for a refund.¹ Treat that stub the way you’d treat the cash you used to buy it.

How the Recipient Cashes or Deposits It

The person named on the “Pay to” line has two choices: cash it or deposit it.

Cashing at the issuer is usually fastest and cheapest. Any post office will cash a USPS money order for free. Bring a valid government-issued photo ID and sign the money order in front of the postal employee rather than beforehand.¹

Depositing works like depositing a check. Endorse the back by signing your name exactly as it appears on the “Pay to” line, then hand it to a teller, feed it into an ATM, or use mobile deposit if your bank supports it.

Federal rules under Regulation CC set how long the bank can hold the funds. A USPS money order deposited in person to a bank employee must be available by the next business day.⁵ Other money orders follow the standard check schedule of up to two business days for local checks and up to five for nonlocal. Banks can extend those holds if they doubt the money order’s validity, if the deposit exceeds $6,725, or if the account was opened within the last 30 days.⁶

If a Money Order Is Lost or Stolen

Take your receipt to any post office and start a Money Order Inquiry. Confirming that a USPS money order is lost or stolen can take up to 30 days, and the full investigation can run up to 60 days. USPS charges a $21 processing fee for a replacement.²

You have one year from the date the money order was paid to file a claim for improper payment (meaning someone other than the intended recipient cashed it). After that, the right to a refund is gone.¹

Does a Money Order Expire?

It depends on who issued it.

USPS money orders never expire. You can cash one years after purchase for full face value.²
Western Union money orders are subject to a non-refundable service charge if you don’t cash them within one year of purchase (three years in California).⁷
MoneyGram money orders don’t technically expire, but a monthly service charge starts after one year and reduces the face value. The specific amount is printed on the back.⁸

The practical rule: cash any money order promptly. USPS is the only major issuer that charges nothing for holding one indefinitely.

Money Order vs. Cashier’s Check

Both instruments guarantee payment, but they fit different situations.

A money order caps at $1,000 per instrument. A cashier’s check has no standard cap and routinely covers tens of thousands.¹
Money orders cost $1 to $3.60. Cashier’s checks typically run $5 to $15, though some banks waive the fee for account holders.
You can buy a money order at a post office, Walmart, or convenience store without a bank account. Cashier’s checks come only from banks and credit unions.
Money orders work well for rent, utility bills, and moderate payments to individuals. Cashier’s checks are the standard for real estate closings, vehicle purchases, and any guaranteed payment above $1,000.

Spotting a Fake

Counterfeit money orders drive several common scams, most often the overpayment scheme: a buyer sends you a money order for more than the agreed price and asks you to wire back the difference. The money order turns out to be fake, your bank reverses the deposit, and the money you sent is gone. You remain liable for the full amount even if you already withdrew the funds.⁹

Before you deposit a USPS money order, check three things:

Hold it up to a light. You should see a watermark of Benjamin Franklin repeating down the left side, or a Pony Express rider on newer versions issued in 2025. A watermark visible without a light source suggests fraud.
Look for a dark vertical security thread running top to bottom with “USPS” repeating along it.
Check the dollar amount for discoloration or smudging. Fraudsters sometimes wash and reprint amounts on stolen money orders.¹⁰

You can also verify any USPS money order at USPS.com by entering the serial number, post office number, and dollar amount.¹ If anyone ever asks you to deposit a money order and immediately send money back, assume it’s a scam.

Reporting Rules for Large Purchases

Most people buying a money order will never hit these thresholds, but they’re worth knowing so a legitimate purchase doesn’t take you by surprise. Buying $3,000 or more in USPS money orders in a single day (across all locations combined) requires you to complete PS Form 8105-A and show valid ID.¹ The same $3,000 threshold applies at other money services businesses under the Bank Secrecy Act, and the seller must keep the transaction records for five years.¹¹

At $10,000, any business receiving that much in cash or cash equivalents in a single transaction (or related transactions) must file IRS Form 8300 within 15 days.¹² Breaking up purchases across visits or locations to stay under these thresholds, known as structuring, is a federal crime on its own, even when the underlying money is completely legitimate. Don’t split transactions to avoid the paperwork.

1
USPS. Money Orders – The Basics
2
USPS. Money Orders
3
Walmart. Money Orders
4
USPS About. IMM Revision: Elimination of International Postal Money Order Service
5
eCFR. Part 229 – Availability of Funds and Collection of Checks (Regulation CC)
6
Federal Reserve. A Guide to Regulation CC Compliance
7
Western Union. Retail Money Order Terms and Conditions
8
MoneyGram. Help for MoneyGram Money Orders
9
Consumer Financial Protection Bureau. Someone Bought Something I Was Selling Online and Sent Me a Check or Money Order for More Than the Price of the Item
10
United States Postal Inspection Service. How to Spot a Fake
11
Financial Crimes Enforcement Network. A Quick Reference Guide for Money Services Businesses
12
Internal Revenue Service. Form 8300 and Reporting Cash Payments of Over $10,000