Online money orders, in person money orders, bank money orders: The options are almost endless. So are the fees. Expect to pay for the act of having a money order issued then sometimes pay again for getting the money order shipped to the recipient. You'd also need to pay fees to replace or refund a lost or stolen money order -- if you can get it back at all.

When you're calculating the pricing and costs of money orders, look out for fees and charges that you might not initially expect. Be sure to keep in mind that:

1. Money order fees may vary widely from institution to institution as well as according to the money order amount.

2. If money order distributors are willing to refund or replace lost or stolen money orders, they're going to charge you a fee.

3. You can buy a money order online, but watch out for high fees.

Action Steps
The best contacts and resources to help you get it done

Calculate fees carefully when you buy money order services

United States Postal Service (USPS) money orders are some of the most easily available and the least expensive as well, with fees typically ranging between $1 and $2. Banks often charge more, anywhere up to about $5, and may include extra fees for issuing money orders to non-members. Keep in mind that there's often a maximum amount for which a money order can be issued. The USPS, for instance, will not issue money orders over $1,000.

I recommend: Learn about the United States Postal Service money order fees in their Customer's Guide to Mailing, or read up on how a bank's fees differ on the Bank of New Madrid's website.

Beware of fees associated with the refund of a postal, private or bank money order

Money orders are an attractive form of payment because, unlike a personal check, they must be prepaid in full before being issued. The downside of this is that, if you lose a money order, it's almost the same as losing a wad of cash. You may have some protection -- for a fee -- with large money transfer institutions like Western Union or the United States Postal Service, where money order replacement fees range from $5 to $30. But you may be out of luck with smaller organizations.

I recommend: Learn about how Western Union issues refunds on its own money orders -- if they haven't already been cashed -- or similar services from the United States Postal Service.

Find the most expensive money orders online

As with many other products, you pay a premium for the convenience of being able to buy money orders online. Expect online money order fees to be $10 or higher. You may also pay extra fees for shipping the money order.

I recommend: Learn about online money order/money transfer fees with the MoneyGram cost estimator, or visit Payko for a quick estimate on how much it costs to purchase an online money order and have it shipped to the recipient.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you're concerned about cashing money orders, insist that you be paid with a United States Postal Service money order and then cash it at the post office, not a bank. This way the authenticity of the money order will be determined immediately instead of after a delay, and you'll know right away whether it is valid.

Financial transactions move our world. There are reasons why, as well as reasons why not, to turn to money orders as a means of conducting business. As in any monetary exchange, use money orders to your advantage, and avoid using them when they could pose a risk.

Money orders are safe substitutes and an alternative to writing checks. If you lose a secured money order, you can have it replaced free. If you lose a check you've already sent, you'll have no way to track it unless (or until) someone cashes it or if you cancel it.

You will want to:

1. Purchase money orders from a reliable source.
2. Avoid becoming a victim of fraud by accepting a counterfeit money order.
3. Plan to use money orders for transactions that are less than $1,000 U.S. dollars, or $700 for international money orders.

Action Steps
The best contacts and resources to help you get it done

Buy money orders from a reputable source

A U.S. Postal Money Order is a secure transaction because the money orders circulate through the Federal Reserve Bank. You can buy money orders up to $1,000 for only $1.50. You have the flexibility of purchasing money orders for military personnel or international money orders.

I recommend: Purchase United States Postal Service money orders through the local post office or another convenient source such as MoneyGram Financial.

Use acceptable forms of money order payment

To purchase a money order, use cash, traveler's check or a debit/ATM card. If you are cashing money orders, present it to a bank or post office. If cashing a U.S. Postal Money Order, a route carrier can accept and cash the money order as well.

I recommend: Cash U.S. Postal Money Orders from a route carrier for convenience, or locate a Family Express center near you.

State your money order terms up front

If you conduct business where you don't want to rely on accepting personal checks, inform your purchaser that you only accept money orders from reputable sources. Don't accept any form of paper that you receive as a bona fide source of capital.

I recommend: Read a sample of specific language so that you can add money order language to your website that includes what form of payment you accept. Do not make exceptions.

Safeguard money order transactions through the mail

Paper substitutes for money serve various purposes. Money orders, unlike traveler's checks or business and personal checks, can simplify the exchange of goods and services for money.

I recommend: Buy money orders from AuctionMoneyOrders.com to mail monetary gifts or purchases. If you lose a personal check in the mail, the bank will charge you a fee to stop the payment. If you receive an authentic money order, you don’t have to worry about securing the funds. All you have to do is cash it and enjoy.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  You can cash and purchase money orders at a post office, but you can also purchase and cash a money order through a mail carrier.
• •  The Federal Reserve Bank will track your money order, and will replace lost or stolen money orders for a small fee.
• •  You can purchase bona fide money orders from some banks, Western Union, some convenience stores such as 7-11 and Wal-Mart.
• •  Due to Bank Secrecy Act regulations, some banks no longer accept certain money orders. Before you accept money orders as a form of payment for your business, make certain that your bank will accept them.

Money orders are financial instruments that you can use in place of a cash or check. In order to get a money order, you must prepay the amount to the company issuing the money order. This can be an advantage when a company requires a guarantee of the funds; since you can't get a money order without prepaying, it means you had the funds and the issuing company must honor the money order.

While banks used to view money orders the same as cash, fraud has forced banks to look at money orders like checks. This means that the sender may need to wait for the bank to receive the funds before it will give you the cash. Here are a few money orders basics:

1. Senders do not need a bank account to get a money order.

2. Receivers can cash the money order at any institution that cashes checks.

3. Senders typically need to pay a fee to buy a money order, and receivers might need to pay a fee when cashing money orders, depending on the financial institution.

Action Steps
The best contacts and resources to help you get it done

Find out how to implement money orders into your business

Whether you want to use money orders to pay for merchandise or you want to accept money orders in your business, it is a good idea to learn money order basics like how to fill one out and the process for cashing one. When you add in the fees involved, you might find it a better option to use a credit card or some other form of payment.

I recommend: Find out more about how a money order works at wiseGEEK. See eHow for step-by-step instructions on how to fill out a money order.

Learn to identify authentic money orders

If your business accepts money orders as a form of payment, you need to take steps to ensure that the money order is authentic. Counterfeiters produce copies that even fool banks. Even if the bank gives you the funds, it may require you to repay the funds in full if the money order turns out to be fake. To reduce your risk, work with reputable companies and learn what you can do to prevent scams.

I recommend: The United States Postal Service provides money orders with built-in security features. Learn more about how to tell if a money order is authentic and find additional information on money orders at its website. MSN Money provides an article on money order scams and offers some advice on how to work with money orders. KOLD offers a report on fake USPS money orders and ways to identify them.

Send money quickly with an electronic money order

An electronic money order is different from a bank money order. Instead of using a piece of paper, the issuing company sends the payment electronically. Usually banks refer to this as a money wire, but online companies use the term electronic money order. The issuing company can send electronic money orders to any of its branches or to a bank via a routing number.

I recommend: Buy a money order online at Western Union, which provides an online money order option for people who want to send an electronic money order. It also offers information on scams. MoneyGram offers an eMoney option for a domestic or international money order. Find information on its anti-laundering policy, agents' reports and other issues involving money orders on the MoneyGram website.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  It is not a good idea to buy money orders online. While online money orders used to be an acceptable way to purchase a money order, the prevalence of scams and fraudulent companies has made this a very risky venture.
• •  Avoid any request to cash a money order and then wire funds overseas, especially if it is an overpayment for a purchase. There are no legitimate reasons why this would be necessary, but the scam is widespread and continues to defraud people every day.

Money order key terms presents safe ways to buy and accept money orders in your business. Almost every convenience and grocery store sell money orders but criminals easily duplicate these money orders and you may wind up accepting a fraud.

Postal and bank money orders offer the best protection against criminals since they are only sold by the issuing party and usually contain watermarks and other identifying features. Consider the following about money order key terms.

Action Steps
The best contacts and resources to help you get it done

Bank money orders

Bank money orders come directly from the bank who issues them. Go to the bank to purchase one. Cash a money order you accepted at the bank listed on the money order.

I recommend: Bankers Online offers a detailed description of bank money orders and explains the difference between bank money orders or cashier checks and personal bank money orders.

Watermarks

Watermarks are images embedded into the money order that can be seen when the money order is held up to the light. Learn what watermarks are on which money orders (Benjamin Franklin is on the postal money order) and only accept money orders with the accurate watermark.

I recommend: Fraud Guides presents a detailed description of a postal money order along with a picture of one. The detailed pictures on this page reflect the watermark when you hold the money order up to the light.

Bank Secrecy Act regulations

Bank Secrecy Act regulations mandates that all banks file a 'Suspicious Activities Report' (SAR) when they suspect someone may be breaking the law. Due to this act, many banks will not accept all money orders, so check with your bank first before accepting money orders at your place of business.

I recommend: Comptroller of the Currency provides detailed information on this Act.

Postal money orders

Postal money orders are sold by the post office or rural carriers and offer one of the safest ways to purchase money orders since they can not be obtained from a third party. The Post Office will replace a lost, stolen or damaged money order. Check with your local post office for the fees involved in this transaction.

I recommend: United States Postal Service offers postal money orders for sale at a sliding fee depending on the amount of the money order.

Counterfeit money orders

Counterfeit money orders schemes abound, so do your homework so you do not fall for them. These schemes attempt to pass off fake money orders as the real thing sometimes by washing the ink off real money orders and then adding their own high quality ink to change the money order amount and payee. Other schemes include using phony paper to print fake money orders.

I recommend: FDIC offers a special alert concerning counterfeit postal money orders.

Financial instruments

Financial instruments is a broad term including all forms of currency including money orders, bank cards, cashier checks and travelers' checks.

I recommend: Investopedia offers detailed information financial instruments including various forms.