Everything You Need to Know About Money Order in Canada

Getting a money order in Canada is straightforward, and it is one of the safest ways of sending money. The money order resembles cash cheques, but there are a lot of differences because, unlike the cheque, you don’t have to worry about it bouncing.

Senders or receivers don’t need access to a bank account to use the money order. The maximum amount of a money order is $999.99, and there are limited locations to cash it. However, the major banks have money orders you can send to someone overseas. 

Since most people do not use money orders, there is a lot of information they might not know. By the end of our article, you will know what a money order is, its characteristics, where you can buy it from, and its advantages over other modes of payment. 

Let us get into it. 

What Is A Money Order?

A money order is a form of payment that looks like a cheque. It has the name of the receiver and the amount sent. However, there is a big difference between the two. 

While you have to wait for a certain period for a cheque to mature, it is different when using a money order. The sender buys the money order by depositing money, meaning that a money order cannot bounce because it is guaranteed money.  

Money Orders vs. Cheques

Money orders resemble cashier cheques because they are both documents containing detailed information. However, there are significant differences between these two, as stated below. 

1. You can only purchase and get a cheque from a bank. This is different with money orders because they don’t have a definite place of purchase. You can get them from retail stores, post offices, banks, and cheque-cashing places. 
2. A bank is the only institution that can back up a cashier’s cheque, while the money order can be backed up by the store it is from. 
3. You can write a cheque with different amounts ranging from the smallest you want to the maximum. The difference with money orders compared to a cheque is that the maximum amount you can buy is $1000. 
4. You need to have a bank account to deposit a cashier’s cheque. Since you can cash the money order at different points, you don’t require a bank account to get the amount. 
5. Cheques can bounce if the sender does not have enough money in the account, whereas money orders are guaranteed cash. The sender pays first to get the slip. 
6. You can make one massive transaction to a person using a cheque, which differs from money orders. Since there is a limit to the funds, you have to send many money orders to complete a huge transaction. 

How to Cash a Money Order in Canada

Once the receiver gets the money order, they cash it at the nearest branch of the same business it was issued. For example, if you got a money order from the Bank of Montreal in Toronto but are currently in Ottawa, you can get a branch of BMO to cash it. 

However, if you cannot access the branch of the business where the sender bought the money order, you can go to a post office, credit union, or cheque-cashing spots. You could pay a fee, depending on the institution’s policies. You can alternatively deposit it into a bank.

Advantages of Using a Money Order

Many people turn to money orders to transact, primarily because of the benefits. Although it has a certain fee, it is safer to move money. The other advantages you get by using money orders are;

• More Security

Only the indicated recipient on the money order can cash it. This reduces the chances of losing the funds to thieves. It also ensures a straight record of the transactions and money usage by the recipient. 

• You Don’t Need a Bank Account

Money orders suit people who don’t have bank accounts well because you don’t need one. Some of the points to cash money orders are at the post offices or cheque-cashing spots which will not ask you to provide bank details. 

• It Offers a Lot of Anonymity

The sender of a cheque must provide their account details and other sensitive information that can be dangerous if it lands in the wrong hands. Besides, some places don’t accept cheque payments because there is no cash guarantee. Money orders contain less sensitive information, and you can use them in most payment points. 

• It Cannot Bounce

If you are getting money from a stranger to pay for an item or service, you might be skeptical about accepting a cheque. Some people send cheques with no money in the account, a reason they bounce. Money orders cannot bounce because the sender pays for them before sending. 

Disadvantages of Using a Money Order

Although you will benefit from using money orders, they also come with some setbacks. Some of them are;

• Sending Limits

The highest amount you can send using a money order in Canada is $999.99. It inconveniences business owners and individuals who want to transact significant amounts of money at once because they have to buy several money orders. 

• An Outdated Method of Transfer

With the fast-growing technology, there are more manageable forms of payments. For example, you can use e-transfer methods like International Wire Transfer to send more significant amounts of money to different locations faster. 

With money orders, you need to pay for the order in person and send it to the recipient, who also has to cash it in person, which is too much hassle in this digital era. Most people also use debit and credit cards. 

• Wrong Details Could Cost You

If you don’t write the recipient’s name correctly, they will not access the money. Also, if the money order gets lost, there are no other records the recipient can use to claim the cash. This means that they will have lost everything. 

Similarly, the sender can cancel the money order before the recipient cashes it, meaning it is a less secure way to transact with strangers. The process of getting the document to cashing it is tedious to the sender and the recipient, yet there are easier ways of sending money. 

How to Get a Money Order in Canada

Getting a money order in Canada is a straightforward process. You need to fill in the following details. 

1. Payees’ information that includes the receiver’s name as per their government documents
2. Your details which include your name and address
3. Correctly indicate the amount of money you are sending. Luckily, you can edit or cancel any information before sending the money order. 

Note: If you make spelling and other tiny mistakes, the recipient won’t access the cash. 

You can use a money order to pay rent and other goods and services from private professionals. You can also pay for insurance. However, it would help if you were sure that your service provider accepts money orders before sending one. 

Final Thoughts

Getting a money order in Canada is a straightforward process. The cheque-like document is a safe payment method, and you can send money locally and globally. However, you should understand how money orders work as explained in this guide.