Money on a laptop with a pen across it

5 Disadvantages of Money Orders

In the "old days" (before the internet), money orders were an accepted method of paying for goods. As technology moves on, however, the old way of doing things is going by the wayside. Improvements in money transfers and banking have taken place, and with the advent of the internet, money orders have inherent disadvantages that have become painfully apparent.

  1. Slow Time of Transit

    Money orders are mailed by “snail-mail”. As the word "snail-mail" implies, the traditional method of mailing a letter through the postal system is slow. It may take weeks, perhaps even months, for a letter with a money order in it to reach the intended party. With modern shopping cart services that most commercial websites have, payment with credit or debit card is instantly transmitted to the merchant.

  2. Loss in the Mail System

    No mail system is perfect, and sometimes postal services do lose mail. It could be as simple as a letter falling out of a carrier's bag or sliding down between the cracks in sorting machinery. If a money order is lost in the mail, your merchant may contact you that no payment was received. You then have to buy another money order, re-mail it out to them, and issue a stop payment on the original money order. This adds up to an exorbitant amount of lost time.

  3. Stop Payment Fees

    If your money order is lost in the mail, you have to issue a stop payment to the money order company. Most companies charge a fee for this service. The fee itself may be more than the money order was purchased for. For example, you bought a $5 money order, and the stop payment fee is $15. To receive your $5 back, you have to pay the $15.

  4. Forgery

    Money orders can (and do) get forged by unethical thieves. Suppose a thief forges a money order with your name on it as the issuer. The bank eventually discovers the forgery, and reports it to law enforcement. Law enforcement will investigate, and you’ll be questioned for suspected fraud!

  5. Bank Processing Concerns

    If you receive a money order as payment, the bank may place a hold on your account until the money order clears. This hold may last for two or three days. If you need access to money, your account is frozen. Imagine a person having $50,000 in a savings account, frozen for three days because of a $20 money order deposit.

The internet has changed the world significantly. From letter writing by email to buying and selling online, the speed of transactions has changed. What used to take a long time now takes seconds. You could be on one side of the world, and instantly pay for a purchase on the other side. With a traditional money order through snail-mail, this process could take months.

Last Updated: August 28, 2023