Home Sending Money Guides Guide to International Money Orders How Do Money Orders Work in Canada?

How do money orders work in Canada?

 If you are in Canada or wish to send money to Canada, this guide will provide useful information to aid your understanding of the subject. We will be focusing specifically on money orders in Canada, looking at how cost effective, reliable, safe and secure they are compared to more modern alternatives.

Updated: 18/10/2022
Read time: 5 minutes
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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 could pay bills, purchase items from catalogues and send money. 

For those with no other option but to send money via mail, money orders have generally always been considered the best option. They are a much safer payment method than sending cash, because if cash is stolen it can be used by whoever intercepted the delivery; and far more convenient than sending a cheque, which requires a bank account and may bounce when the recipient cashes it. 

Instead, a money order is a piece of paper, not dissimilar from a cheque, that is a secure payment method. It is a cashable document which does not require a bank account, debit or credit card. 

In the age of online payments and electronic money transfers, money orders are not in as high demand, however they are still in circulation. 

How do money orders work in Canada?

In Canada, even if you are sending money internationally, money orders will only be available CAD, USD or GBP. In addition to this, if you purchase a money order through Canada Post (the primary postal operator) the money will typically only be sent within Canada. 

Another important thing to note is that money orders purchased in Canada will have a maximum limit of $999.99 Canadian dollars.

Are money orders safe?

As mentioned previously, if you are sending money in the mail, a money order is safer than cash because it cannot be intercepted and cannot be easily duplicated. 

Furthermore, when purchasing a money order, information will be requested about both sender and receiver; this ensures that the money order can only be cashed by the intended beneficiary. 

Another added safety measure, designed to ensure funds are deposited with the intended recipient, include the following anti-counterfeiting features: 

  • A barcode serial number 
  • Printed in polarised ink
  • A unique security code verified by the beneficiary upon collection 
  • A recipient from the issuer which provides proof of payment (in case the money order is lost) and can also provides a tracking number so both parties can track the status of the payment

Generally speaking, money orders are considered safe, but due to the ever-evolving world of financial services and digital payment platforms, they are no longer considered the safest option.

What types of money orders are available in Canada? 

Although not as popular as they once were, money orders can be purchased in Canada from the following places: 

How much does a money order cost?

As with most remittances, money orders come with a price, so it is worth preparing to pay a fee on top of the value of the money order. 

Fees differ depending on the issuer, and banks are generally most expensive, with fees ranging between $5 – 15 CAD. 

What are the alternatives to money orders?

While money orders still serve a purpose, the leading money transfer providers are able to arrange the following services online, in-person or over the phone: 

Summary

Learning about the ins and outs of a money or postal order is useful knowledge, as you may be faced with a situation whereby money needs to be sent in the mail. If this is the case, money orders are a guaranteed form of payment (unlike cheques) and cannot be used by thieves (unlike cash). However, the downsides of using a money order in Canada includes the maximum limits applied ($999.99), fees incurred (these will add up if regular payments are made) and the lack of availability (most money transfer providers offer alternative methods of payment). 

We hope this guide has helped you understand money orders and will consequently help you decide the best way to send money to Canada.

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Article Factchecked by Elliot Laybourne on 20th July 2022

Elliott is a former investment banker with a 20 year career in the city of London.

During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making.

During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others.

April Summers

April is a trained journalist and the Content Editor for MoneyTransfers.com. She has 10 years experience writing about a diverse range of subjects, from financial services to arts and entertainment. When she’s not writing about global remittances she can be found daydreaming about her next holiday abroad.

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