Are money orders secure?

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Are money orders secure?

Rounding it up

  • Canada Post money orders are a guaranteed form of payment that you can use to send funds through the mail.

  • Money orders operate like cheques, but they offer more security for the payee because they don’t contain private information about your bank account or financial details.

  • The only person who can cash a Canada Post money order is the recipient, who also needs to show photo ID to get their funds.

  • Canada Post guarantees its money orders, which means that you can request a refund for a lost or stolen money order—so long as it hasn’t been cashed.

8 min read

April Ann Quiñones
#money order#safety#fraud prevention

A money order is a type of payment that you can send to someone else in the mail. You can get them from Canada Post and from a number of financial institutions like Western Union.

But how do money orders work? Are money orders secure?

In this article, we’ll discuss these questions and more. Up next, we’ll take a closer look at how money orders function in Canada and what they’re used for. We’ll also talk about the different security features that money orders offer so you can decide if they’re the right choice for your payment needs.

What is a Money Order?

A money order is a guaranteed form of payment that you can use that’s sort of like a pre-paid cheque.

In Canada, you can get money orders from a number of institutions like Western Union. But when most people refer to “money orders” in Canada, they’re actually talking about postal money orders, which you can get from Canada Post. Since postal money orders are more common, we’ll primarily refer to them in this article.

Money orders are primarily used to make smaller payments (each Canada Post money order has a maximum value of $999.99) through the mail. They operate sort of like a hybrid between a personal cheque and cash because they provide you with the convenience of cash while also giving you the added security benefits of paying by cheque.

There are a number of benefits of using postal money orders in Canada. These include:

  • Cash-Like Transactions – Money orders aren’t cash, but they are almost as convenient. Since a money order can only be redeemed in cash, it’s basically like sending cash in the mail (something that’s not recommended anyway) but without the risks of having your funds stolen if someone intercepts your mail.

  • Guaranteed Payments – Postal money orders in Canada are guaranteed by Canada Post. If your payment never arrives at its destination, you can cancel it and get a refund if it’s been more than 45 days since you purchased your money order.

  • Secure Funds Transfers – A Canada Post money order boasts a slew of security features like watermarks and fluorescent fibres. Additionally, only the person named on the money order can cash it. To cash a money order, you also need to show a copy of your photo ID, which makes it harder for someone to steal your funds.

  • Private Transactions – When you send money via cheque, you’re exposing your banking details for the world to see. This can be a concern if you don’t know who you’re sending money to. Money orders don’t display your banking account and routing numbers, so they offer an additional layer of privacy for your financial information.

So when might someone use a money order? Here are some of the most popular reasons why people tend to make and receive payments via postal money orders in Canada:

  • You want to pay someone in cash but you don’t want to send cash through the mail

  • Either you or your recipient doesn’t have a bank account

  • You need to make a payment to a company or individual that you don’t know

  • It’s important that you can track your payment and see when it’s been cashed

  • You need to receive a payment from someone and you want a guarantee that you’ll receive your funds

It’s worth mentioning that postal money orders used to be fairly popular for sending funds internationally, especially to the US. But Canada Post seems to be limiting international money orders, so you may not be able to use them to send money abroad. Some companies offer international money orders, but you’ll need to verify this with your chosen financial institution.

How Does a Money Order Work?

Now that you know what money orders are, you might be wondering how they work. Thankfully, the process is fairly straightforward.

As we’ve mentioned, you can get money orders from some financial institutions, but most people get them from Canada Post. Since postal money orders are the most straightforward, we’ll exclusively discuss them here.

With that in mind, here’s a multi-step guide to how a money order works in Canada:

  1. Go to the Post Office – The first step in sending a money order is to go to a Canada Post location and request a money order.

  2. Fill Out a Money Order – Once you have a money order in hand, you can start filling it out. To do so, you need to provide your name and address, the name and address of your recipient, and the amount of money that you want to send in the mail. Keep in mind that you can’t send more than $999.99 per money order.

  3. Pay For Your Money Order – After your money order is filled out, you need to pay for it. Canada Post only lets you pay for postal money orders in cash or with a debit card. You will also need to pay a transaction fee ($7.50 as of the time of writing; check with Canada Post for the most up-to-date pricing) to buy a money order.

  4. Send Your Money Order – As soon as you pay for your money order, it’s time to send it in the mail. Technically, you can also physically hand a money order to someone else, so it’s up to you to decide how you want to deliver your payment.

  5. Keep Your Receipt in a Safe Place – When you buy a money order, you’ll be given a receipt for your transaction. Do not lose this as it contains the serial number for your money order. If you lose your receipt, it may be difficult—if not impossible—to track your money order or to request a refund.

Once your money order is in the mail, you can sit back and wait for it to arrive at your recipient’s address. After your recipient receives the money order, they can head to the post office (or some banks) to cash it.

To cash a money order, your recipient simply needs to go to the post office with a copy of their photo ID and ask to redeem their payment. An employee at Canada Post will verify that the money order is legitimate and that your recipient is the person listed on the document. If everything checks out, your recipient will receive their funds in cash.

Are Money Orders Secure?

Money orders may sound cool and convenient, but are they actually secure?

The short answer is that, while money order fraud is a real issue that everyone should be aware of, postal money orders are just as secure—if not more so—than many other similar types of payment, like personal cheques.

There are a number of security features that you get with money orders to help safeguard your money and personal information. These include:

  • Physical Security Features – Counterfeit money orders do exist, so always be on the lookout for them when accepting them as payment. Canada Post designs their money order documents with a number of physical security features to help you identify fake ones with relative ease. This includes watermarks, fluorescent fibres, and scannable barcodes that allow each document to be tracked from the moment of purchase to the time of redemption.

  • Privacy-First Design – While it is true that you have to write your name and address on a money order to make it valid, you don’t have to provide your banking details. This makes money orders arguably more secure than personal cheques, which have your account and routing numbers for your chequing account listed on them.

  • Photo ID Required For Redemption – Canada Post requires that you show a photo ID to redeem a money order. This is designed to prevent someone from stealing a money order and cashing it as if it were their own. As a result, it provides an extra level of security when compared to mailing cash (which isn’t recommended anyway).

  • Guaranteed Payments – All Canada Post money orders are guaranteed, which means that Canada Post will refund lost and destroyed uncashed money orders. Note that you typically have to wait 45 days after the date of purchase to claim a refund and you won’t receive a refund for your transaction fee (currently $7.50 per money order).

So are money orders secure? When used properly, money orders are considered a secure method of payment in Canada. But like all payment methods, fraud is an issue with money orders. If you’re concerned that you received a fake money order, contact Canada Post directly for more guidance.

How to Cancel a Money Order

If your money order was stolen or lost before your recipient got a chance to cash it, you may need to cancel your money order and request a refund.

According to Canada Post, uncashed money orders come with a refund guarantee after 45 days. Do note, however, that if the money order was cashed, you can’t get a refund for it. Additionally, you won’t get a refund for the transaction fee that you paid when you purchased a money order.

If your money order was lost or stolen and it’s been more than 45 days since you purchased the money order, Canada Post recommends doing the following to request a refund:

  1. Find Your Receipt – You will need the serial number for your money order to request a refund. This is listed on the receipt that you were given when you made your purchase.

  2. Call Canada Post – You can call Canada Post’s customer service department to request a refund. They will walk you through a number of steps to determine if you’re eligible for a refund of your money order and will tell you what you need to do to next get your money.

What happens if you lose your money order receipt but need to get a refund?

Unfortunately, you may not be able to get a refund for your postal money order without the receipt. Unless you have the serial number of the money order (which is listed on the receipt) and you can prove that you were the sender of the original document, it’s unlikely that Canada Post can process your refund.

If you have any questions about refunds or postal money orders in general, contact Canada Post directly for the most up-to-date information.

Is a Money Order A Safe Way to Send Money?

A money order is typically considered a secure method of payment, but there are issues with money order theft and fraud in Canada. Therefore, some caution is needed when using money orders to lower your risk of financial loss during your transactions.

If you choose to send payments via money order, be sure to keep your receipt in a safe place until it’s cashed by your recipient. Alternatively, if you receive payment via money order, always double-check the document for authenticity before you accept it. If you have any questions about postal money orders, contact Canada Post directly for more specific information.

As a general rule, money orders are considered secure payment methods in Canada. But, ultimately, it’s up to you to decide if a money order is a good option for your payment needs.

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