Money Order vs. Wire Transfer: What’s the Difference?

Quick Answer

A money order is a paper form of payment, while a wire transfer is handled electronically. The two payment options also come with different value limits and fees.

Close up shot of unrecognizable group of business people standing by the window, using their smart phones, initiating payments. Seen through glass window.

You've got several options when you need to send money to another person. A money order and a wire transfer are two ways to initiate the payment, but they work very differently. Let's review.

What Is a Money Order?

A money order is a guaranteed form of payment that works like a prepaid paper check. After providing the name of the recipient and the amount, paying the face value of the money order and covering a small fee, you receive a paper document that you hand to your intended recipient. That person can then take the paper money order to a bank or retailer to cash it in.

You can buy money orders at various places like the post office, Western Union or a retailer like Walmart. Each provider may set a different dollar limit on the amount you can buy and may charge a fee. Domestic money orders usually max out around $1,000 to $5,000 while the purchase fee is small, around $1 to $5. (Some providers charge a higher fee to buy a money order with a credit card or decline the form of payment.)

Recipients may prefer this form of payment because it's backed by a financial institution and the funds won't bounce or expire. The sender may appreciate that the money order offers privacy, since it doesn't require a bank account. It's also more secure than carrying cash; both parties must sign the document, and it may be replaceable if it's lost, stolen or damaged.

While the process of buying a money order is quick—it may take a few minutes—the rest of the process depends on how quickly you hand the money order to the recipient and when they cash it.

What Is a Wire Transfer?

A wire transfer is a way to electronically move funds from one person's bank account to another person's account. A financial institution or retailer facilitates the process for you. Typically, your bank verifies you have enough funds for the transfer and sends money to your intended recipient's bank. Then the recipient's bank sends the money to the recipient—usually on the same day if not instantly. That's one reason it's important to know whether you have the correct information before initiating a wire transfer. These transactions are usually irreversible.

While you'll need to know the recipient's name, address, bank account number and routing number to set up the wire transfer, you won't need to link the two bank accounts to complete it.

You may have to pay an outgoing wire transfer fee to initiate the process or an incoming wire transfer fee to receive the funds. These fees range from about $0 to $50 and depend on the institution and where the money is going. Generally, fees for domestic and incoming transfers are cheaper, while international and outgoing wire transfers are more expensive. Each institution may also set a dollar limit. It's typically high, around $100,000.

Key Differences Between a Money Order and a Wire Transfer

A money order is a paper form of payment that comes with a small fee. You'll need to buy the money order at a retailer and hand it to your recipient. People usually use these for small payments—around $1,000 to $5,000—when they don't have a checking account or don't want to share account details with the recipient.

In contrast, wire transfers are electronic payments that are instant and come with higher limits around $100,000. The fees for sending and receiving a wire transfer are also much higher compared to the few dollars you'll spend sending a money order.

Money Orders vs. Wire Transfers
Money Order Wire Transfer
Type of payment Paper Electronic
Typical fee $1 to $5 $0 to $50
Typical dollar limit $1,000 to $5,000 $100,000
Availability Banks, credit unions, retailers, post office Banks, credit unions, retailers
Speed Depends on sender and recipient Can be immediate or same day
Reversals Can usually stop payment within the same day Potentially irreversible

The Bottom Line

Money orders and wire transfers are both types of payments, but a few clear differences set them apart. A money order is a paper form of payment that's ideal when you need to pay someone a relatively small amount, around $1,000 to $5,000, and speed isn't as important. Wire transfers are best when you need to send up to $100,000 to another person and you want the funds to arrive within the same day. You won't need a bank account to use a money order, but you'll need one to initiate a wire transfer.

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