In a global financial environment, the transfer of funds between entities can present challenges. The unbanked may not have the ability to send money through the usual banking channels. Furthermore, the convenience of a direct way of sending money can be a problem solver for thousands of people worldwide.
What Is a Money Order?
Money orders are certificates that banking institutions or governments issue for the immediate transfer of money. In effect, a money order allows the recipient to have cash on-demand with the accredited institution guaranteeing the transaction.
First appearing in 1882, American Express created this form of money transfer. The method later became popular as traveler’s checks. This convenience provides safety to people that don’t want to carry money on them when traveling.
How Does a Money Order Work?
A money order works by replacing the necessary funds for your intended purpose with a document. In effect, this piece of paper operates as a check that you can cash or deposit at a financial institution such as a bank. It also replaces personal checks by providing the exclusive right to cash a money order to the sender and the recipient.
Keep in mind that depending on where the money order is cashed, a small fee may be incurred. Also, there may be a delay when cashing the money order with an institution other than the one that issued the specific transaction.
Uses of Money Orders
Money orders are still very popular and useful even in the digital world. Many people take advantage of the benefits and convenience of this method of money transfer.
Paying for an Item
Many retailers accept money orders in exchange for their goods and services. Using a money order not only offers you an extra payment option but also sidesteps the security risks associated with credit cards and online transactions.
Money orders guarantee the safety of your transactions while making a purchase but can also be a security precaution when traveling. Replacing cash with a money order ensures that you won’t be caught with currency on your person by a robber or pickpocket. Furthermore, wallets are known to “disappear” from hotel rooms or a briefly unattended bag in a public space.
People that are Unbanked
A significant percentage of the world population remains unbanked. This means that they either do not have access to banking or don’t have the luxury of being able to enjoy those services. Money orders allow the unbanked to transact without the need for accounts, credit cards or online banking.
Securing a Payment Via the Mail
Sending cash through conventional mail is a great risk that you should avoid. The same holds for checks, though, but for a different reader. When sending a check, you’re trusting the recipient with your bank account number.
While this may not be an imminent risk, the potential for fraud exists. Sending a money order removes any risk as only the recipient will have the ability to receive the funds.
Getting a Money Order
You initiate a money order by prepaying the amount at the point of sale. If this sounds interesting and you’re wondering where to get a money order, you’ll be happy to know that there are thousands of locations across the globe.