When you are living abroad, or you have family or friends living overseas, it is likely that at some point you will need to send an international money transfer abroad. There are many ways to do this, and one of the most familiar is with an international money order. Money orders may seem like an old-fashioned way to transfer money in the age of online money transfer companies, but they are still a safe and convenient method for sending smaller amounts internationally. This guide will take you through everything you need to know about international money orders.
A money order is a piece of paper, similar to a cheque, which is used as a method to make payments overseas. It is a safe alternative to cash and even personal cheques. On the money order, it is specified who will receive the money and both the payer and beneficiary must sign it for it to be valid. A money order can be purchased by prepaying the amount printed on it and filling out a form provided by the issuer, and then can only be paid out to the designated recipient.
International money orders can be obtained from postal services, some banks, and remittance providers such as MoneyGram and Western Union. They are accepted in many countries across the world and can be converted to local currency in a wide variety of countries.
What is a money order? Pre-internet, many people around the world had no choice but to send money in the mail, albeit cash or cheque. The first known instance of a money order (also known as a postal order) dates back to the late 1800’s, when the U.S. Postal Service began issuing them so people […]
What is an international money order? A money order is a piece of paper, similar to a cheque, which is used as a method to make payments overseas. It is a safe alternative to cash and even personal cheques. On the money order, it is specified who will receive the money and both the payer […]
Pros and cons of international money orders
Like any other payment method, a money order will have benefits and drawbacks. Here’s a quick summary of money order pros and cons.
Convenience: Money orders are a fairly convenient payment method. You don’t need a bank account, and you can pay for it using cash, debit card, or even traveller’s cheques.
Safety: International money orders are safer than cash if you have to mail money overseas. Even if the order gets lost or stolen, you can get them reissued and don’t have to worry about someone stealing the funds. Also, an international money order usually requires signature of both the payer and beneficiary, which adds a layer of security.
Guaranteed: Unlike a cheque, a money order cannot bounce as it is already paid for before being sent. So, the payment is guaranteed when the beneficiary collects the funds.
Expensive: The sender has to pay fees to purchase an international money order, and there are often recipient fees associated as well. This makes international money orders a relatively expensive way of sending money overseas.
Poor exchange rates: With money orders, you often end up getting poor exchange rates, which can impact the amount of money you’re able to send.
Slow: International money orders are often mailed to the recipient. This can take a while depending on the countries involved, and is typically slower than online transfers.
How do I send an international money order?
The basic steps involved in sending an international money order are pretty simple. Here;’s a step-by-step guide to take you through the process:
Ensure that international money orders are accepted in the recipient’s country: While international money orders are widely accepted, it may still be in your best interest to check if the country where you are sending it supports them. For example, if you have purchased your money order from USPS, it will be accepted in 27 countries only.
Decide where you want to purchase your international money order from: You can purchase your international money order from your bank, postal services, Western Union, MoneyGram and many other providers. Do some research and find out the provider that proves least expensive and most convenient.
Gather all the information for payment and delivery: You need to be prepared with the name of the recipient and address, and also have the necessary cash or debit card ready to pay for the money order. You may be able to pay with credit as well with some providers as well, but this will usually incur extra fees.
Fill out the form: Write the name of the individual or business that will receive the international money order on the line that starts with “Pay to” or “Pay to the Order Of.” In the purchaser section, you enter your personal information. If you are paying a bill, include your account number in the memo section.
Sign the international money order: To make the money order cashable, you should sign it where it says “purchaser’s signature”.
Track your money order: The issuer will provide you the receipt with the details of your money order as well as the tracking number. You can use this number to track the money order and to verify whether it has reached the recipient or not.
What are the alternatives to international money orders?
If you’re considering other options for transferring your money internationally, the two main options you’ll want to consider are using your bank or an online money transfer provider. These both have their pros and cons, but in general online money transfer providers will be able to deliver your money faster and less expensively than if you use an international money order. Here’s a quick summary of these to other notable options.
The most obvious alternative to international money orders is a bank transfer. You can simply walk into your bank branch or login to your internet banking account and make an international money transfer. The transfer occurs via the SWIFT network, which is a messaging network used by banks and financial institutions all over the world to transfer information, including money transfer instructions. Depending on where the money is coming from and going, the currencies involved, and the amount of money transfer, your transfer may happen instantly or may take 2-3 days.
Banks tend to be able to facilitate large international transactions, but you’ll also have to pay a fixed transfer fee and a mark-up on the exchange rate as high as 5% to make an international money transfer with a bank.
Money transfer companies
Over the past few years, specialised money transfer companies such as XE, Paysend and WorldRemit have emerged as a great alternative to both international money orders and bank transfers. These companies have been successful in employing latest technologies and improved systems to bring down the transfer times and costs significantly. In general online money transfer companies can offer lower fees than banks, they are quicker, and also charge exchange rate margins between 1% and 2%, as opposed to the high margins often levied by banks.
Money transfer companies also support a variety of payment and delivery methods. You can pay for your transfer using bank transfer, debit or credit card, e-wallets, or cash, and the funds can be delivered to the recipient’s bank account, as picked up in cash, or even home-delivered (depending on the provider you choose). It is important to note that not all services are designed alike and there is no one-size-fits-all solution to all transfer needs, so it’s always important to compare your options when transferring money abroad.
International money orders vary in price, and in general cost upwards of $10. For example, an international money order from USPS will cost $10.25 plus processing fee. There is a limit of $700 for international money orders if using this route, but you can purchase several money orders of $700 denomination if you intend to send a higher amount. This means that, for instance, sending money orders worth $7000 through USPS would cost more than $100 in fees.
Another cost associated with international money transfers is the currency conversion fee when the recipient cashes the money order or deposits in their local account. Again, the exchange rate margin will vary on a variety of factors including the provider you use, the country you’re sending to, and the currencies involved, but it is typical to see margins associated with international money orders being higher than with online transfers.
How fast are international money orders?
The total time an international money order takes can vary from a few days to few weeks long depending on where the mail is being sent. This means it is rarely the fastest option for transferring money, and this is because there are a variety of steps involved.
Normally, it takes no more than a few minutes for you to get your money order made. Once you fill up the form and pay for the money order, the issuer will take only a few minutes to process the request and provide you the money order. However, once you have made and paid for your order, it will then take more time to be physically sent to your recipient before they can get it paid out.
Do international money orders have transfer limits?
Yes, international money orders have transfer limits, and in fact they tend to have very low maximum sending limits. For example, USPS has a maximum limit of $700 for international money orders, and allows the sending of multiple money orders up to a maximum limit of $10000. Generally, most providers would have a limit of around $1000 per money order, meaning that if you are planning to send large amounts overseas, international money orders might not be your best option.
Can I cancel an international money order?
You may be able to cancel an international money order if it has not been cashed.
If you’re considering whether there might be a better alternative for you than an international money order, then take the time to compare them to other alternatives such as banks and online money transfer companies. If you want a guaranteed prepaid way of delivering money overseas, then international money orders might be for you, but by looking into the various online money transfer providers around today, you will probably be able to find a quicker and cheaper way to transfer your funds abroad.
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Jonathan is the founder and editor of MoneyTransfers.com. Jonathan is highly experienced in the currency transfer market, having previously worked in the FX trading industry, alongside being an avid traveller. Using his knowledge he identified a need for transparency and further education to help people save money on their money transfers, leading to the creation of MoneyTransfers.com