Money Orders Key Terms

Learn the language involved before your business accepts money orders

By Lori Carver

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.

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.
Try: 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.
Try: 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.
Try: 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.
Try: 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.
Try: 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.
Try: Investopedia offers detailed information financial instruments including various forms.