What is money order?
It is an order to pay certain amount of money which is pre-determined. It is a way to pay the money before the work done and it is more trusted than a cheque. Thus it is a way to prepay the money prescribed in it, the person who has purchased the money order can also exercise the option of stop payment. This instruments are often used to pay the small amount of debts and it can be used for the business and personal both the purposes. It is also popular as a traveller’s cheque.
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Money orders are generally available at any post office or any grocery store so it is easy for the person to purchase this money order in exchange of the cash. It can be used for most of the payments and it can be also used for purchases. The limitation of the cheques that there are possibilities that they will bounce and the seller will not be able to get his money in the timely manner is discarded in the money order as there is less probability of the payment getting delayed as they are prepay instrument. The money order is safer as the person will give you the amount that he has collected against the money order. The only threat is that money order may not be genuine but it is very uncommon.
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How does money order works?
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The person who buys the money order will have to fill in the name of the person to whom he wants to pay the money and shall also state the amount to be paid to the person. Most of the money order has some stipulated maximum limit and thus the payment shall not exceed such limit, if the person wants to pay more than the limit then he needs to buy the multiple amount of the money order. The institution which will issue such an instrument will have the payee’s name, issuer’s name, and the amount that can be converted into the cash.
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The purchaser will get the receipt in the serial numbers of the money order. The purchaser shall always keep these receipts with him till the order is clear as it will be impossible for him to trace the money order. The recipient of the money order may not have the same issuer of the money order who has issued the order. So the recipient can encash such an order at the local institution or local banks, he will receive the funds but as per the institutions policy that he may or may not get all the money at the same time. If the recipient does not have the account having the money order cashed in the local banks is a wise option. Convenience stores, grocery stores and payday loans stores also provide the facility of encashing the money order and if the payee has got an account then he can deposit the order in the bank account so that the amount is directly deposited in his account.