How Do Money Orders Work?

When you get set up to sell your handmade items online you will need to choose the forms of payments you will accept. One of them is the money order. Here is what you need to know, starting with the basics.

What is a money order? A money order is like a check. A customer purchases a money order and pays a small fee in addition to the amount that they will be paying you. Basically it is a prepaid check.

What do you do with a money order? You can cash it or deposit it like a check at your bank. Many grocery stores offer Western Union money orders and also cash them. USPS money orders can be cashed at the post office.

Why would a customer send a money order versus a check? They can be tracked and they can get a refund if it is lost. It is safer than a personal check and they can get proof of payment. People who do not have a bank account can use money orders as a form of payment.

Who issues money orders? The US Postal Service and Western Union are the most common issuers. You can also buy them at gas stations and big box stores like Walmart.

Should you take them? I think accepting money orders and giving customers the option to pay with one is a good idea. Some people are not comfortable with Paypal or using credit cards online, or maybe they do not have a credit card.

I didn’t receive the money order – More often than not, when you wait a couple weeks and the money order does not arrive, the customer never sent it.

Money Order vs Paypal/Credit Card Payments – You will receive the full amount printed on the money order. If you take a credit card payment you will pay a fee. Say you receive a USPS money order and go to the post office and cash it. You now have the cash in hand. Since you were paid in cash there is no chance of a charge-back.

International Money Orders – I personally have not had any issues but feel much safer using Paypal instead.

Can I take money orders if I sell on Etsy or Ebay? You can on Etsy but you cannot on Ebay for most all transactions. Ebay wants you to use Paypal. Ebay actually owns Paypal.

Why would you not want to accept money orders? They are more hassle for the customer. A customer is likely to pay instantly if you accept credit cards but may not end up driving to get a money order. There is also the delay. It takes time for a customer to go get one and then it has to be mailed. If you do custom orders and request a deposit and then a final payment you will have to wait for two payments to be mailed. When you receive a money order you have to drive to the appropriate location to cash it.

Do you have to wait for a money order to clear before shipping? Not if you can cash it either directly at a Western Union check cashing location or at the Post Office. If you deposit it into your bank account you run the risk of it not clearing 2-3 weeks after you have already sent your items to your customer. I went to my personal bank once to cash a money order and they actually told me they had no way of confirming it was not fraudulent.

What is the best type of money order to receive? Definitely a money order from the US Postal Service. Why? A customer has to use either a debit card or cash to buy one. You can cash it directly at the post office so you will not run the risk of it not clearing at a later date.

Any more tips? If a customer chooses to pay by money order request they that send you one from the US Postal Service. Always cash it before shipping out your handmade items to a customer. The safest way to cash a money order is to cash it at the place where it was issued, usually Western Union or the USPS, rather than depositing it in your bank account. Banks cannot guarantee that the money order is real and it would be bad for it to not clear after you have mailed your items. If you feel uncomfortable about a transaction request another form of payment. Trust your instincts.

Good luck with your selling

Richard

Tags: ebay, etsy, money order, paypal, personal check, usps, western union