How Do United States Postal Money Orders Work?

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United States postal money orders are a financial instrument issued by the post office. They are similar to a check in that the money order is made out to a specific person or party for a specific amount of money.

They are typically used as a secure way to pay for goods or services. The purchaser of the money order pays the amount in cash or traveler's check to the post office, which then issues the order. The amount paid includes the face value of the money order plus a small sliding scale fee that depends on the amount and nature of the recipient.

Postal money orders differ from checks in several ways.

  • They are always valid and do not expire.
  • They may be purchased in amounts up to $1,000 if the both the sender and recipient are in the U.S.
  • The upper limit is $700 if the recipient is international.
  • They can be replaced if lost or damaged provided the purchaser has retained the receipt.
  • They may be cashed in 29 different countries.

Because of their security, postal money orders are often the preferred method when payments are sent by mail or courier. As such, they are also increasingly subject to fraud and counterfeit postal orders have been used in Internet scams.