What is a Certified Money Order?

A certified money order is generally a safe way to transfer money from one party to another. It is purchased at the U.S. Post Office or any number of retailers for a nominal fee in addition to the face-value amount and then given to another party in the same way as cash. Due to the fact that a certified money order is guaranteed by the issuing institution, it is more trusted by many businesses and governments for payment.

In the U.S., a certified money order purchased at the post office currently has a limit of $1,000 U.S. Dollars (USD) for domestic transfers and $700 USD for international transfers. For security purposes, there are three parts to a certified money order. The main part is the order itself, which indicates the amount it is good for and the person to whom it is payable. The second portion is a receipt stub, which includes the number of the money order that provides the purchaser with proof of payment. The U.S. Postal Service or the retailer also keeps a hard or electronic copy of the money order should any disputes arise between the payer and the payee.

Although this kind of money order is considered one of the most difficult things to counterfeit, especially when purchased from a post office, it can also be used by financial predators. A common scheme with certified money orders is for a con artist to send one to a random person, asking that person to cash the money order at the bank and send some of the money back. Certified money orders run through a different system than checks and can take a while to bounce at a financial institution. This allows a thief to get away with the money before the bank ever realizes it was no good, leaving the victim to foot the bill.

If you receive a money order that is certified, the best way to avoid the possibility of fraud is to always cash it order at a post office; the postal service has access to the system which will immediately provide notification as to whether the money order is legitimate. While no payment is 100% guaranteed, a certified money order is perhaps one of the most economical and safe ways to send money between two parties.