What is a Money Order?

A money order is a payment order where the individual named on the order receives a predefined amount of cash from the sender. The amount of cash the sender has to send has to be prepaid.

This feature has made it popular over sending cheques where there is a chance that the cheque may bounce. It is also good for the sender as the receiver cannot overdraw.

How to send a Money order?

Money Order forms can be obtained from any post office and money orders can be sent during normal post office timings. The cost of the Money Order is subsidized by the government of India, a form costs 25 paise. The commission charges for the order are very economical, Rs 1 for every Rs 20 sent.

The person sending the cash has to fill in his name, address, amount to be sent along with the recipients name and address. He can also write a short message as there is a provision for sending a short message on the money order form. The money order generally reaches the recipient in a week’s time. On receipt of the money, the recipient sends a signed acknowledgement by ordinary post.

In case there is a need to send the money quickly, a speed money order can be made. This takes less than a week’s time. For this an additional stamp of Rs 5 is required on the money order. The limitation with this feature is that it is not available at all post offices.

In case of complaint - Usually the recipient receives the money in a week’s time. When the recipient does not receive the money within 30 days, the sender can register a complaint with the post office. The matter is taken up by the post office, which finds the cause for the delay solves it and ensures that the recipient receives the money.

Why use a Money Order?

Sending a money order to anybody in India is very easy and economical thanks to the Indian Postal Service. In India a majority of the people live in rural places where access to bank may not be easy. Many people chose money order over Demand Draft.

Demand Draft is another option of sending cash which is prepared in a bank. The time taken for preparing a Demand Draft is about two hours. The number of bank branches is far less than the network of post offices. Hence people in India prefer sending a money order.

Advantages of Money Order

• The major advantage of sending a money order is that the receiver or the sender need not have a bank account. The sender pays cash and the receiver receives it!
• Another advantage of a money order is that it can be sent to any remote or rural place where a bank may not be even heard of!
• Another advantage of a money order is that it does not have a time limit. The payee can cash it at any time.
• People without a bank account can pay bills through mails.
• There is no limit for the age to send a money order as is the case to open bank accounts.

Limitations of Money Order

Many insurance and brokerage companies do not accept money orders as the money can be misused.

With the benefits far outnumbering the limitations, sending a money order is very much a preferred way for sending cash. Not to mention it being very economical too!