Can You Buy a Money Order With a Prepaid Card?

The question of purchasing a money order with a prepaid card is common for individuals seeking flexible payment solutions. Both prepaid cards and money orders offer distinct advantages: prepaid cards provide an alternative to traditional bank accounts, while money orders serve as a secure method for guaranteed payments. The ability to combine these two financial tools, however, is not always straightforward and depends on specific conditions and policies.

Direct Purchase of Money Orders with Prepaid Cards

Directly purchasing a money order using a prepaid card is generally not possible at most retail locations. This limitation stems from the payment policies of money order issuers and the operational nature of prepaid cards. For instance, the United States Postal Service (USPS) and many retailers like Walmart require payment for money orders to be made with cash or a debit card. They do not accept credit cards or prepaid cards that are not processed through a debit network with a PIN.

Money orders are considered cash equivalents, requiring guaranteed upfront funds. Accepting payment via credit or certain prepaid cards could be a cash advance, carrying fees and risks for the merchant. This is why payment networks and merchant policies ensure immediate fund availability and prevent fraud. While some reloadable prepaid cards that function similarly to debit cards and support PIN-based transactions on a debit network might be accepted at specific locations, these instances are exceptions. Non-reloadable gift cards, or those without a linked bank account or routing number, are universally declined for direct money order purchases.

Indirect Methods for Using Prepaid Card Funds

While direct purchase may be limited, there are practical methods to use funds from a prepaid card to obtain a money order. The most common approach involves converting the prepaid card balance into cash. Once you have cash, you can purchase a money order at any location that offers them, such as post offices, grocery stores, or money service centers.

One way to access cash from a prepaid card is through an Automated Teller Machine (ATM). Many reloadable prepaid cards allow ATM withdrawals, provided you have a PIN. Another method is obtaining cash back at a point-of-sale (POS) terminal during a purchase at participating retailers. Many grocery stores offer this service, allowing you to request an amount of cash greater than your purchase, with the difference returned in cash. Once you have cash from your prepaid card, you can purchase a money order.

Transaction Limitations and Fees

Using prepaid cards to acquire a money order involves financial considerations like fees and transaction limits. Prepaid cards often come with various fees, including monthly maintenance fees, ATM withdrawal fees, and cash back fees. ATM withdrawal fees typically range from $1.50 to $2.95 per transaction, plus potential ATM operator surcharges.

Beyond prepaid card fees, purchasing a money order incurs a separate fee. Money order fees vary by issuer and amount, generally ranging from under $1 to a few dollars. For example, USPS money orders cost $2.35 for amounts up to $500 and $3.40 for amounts between $500.01 and $1,000. Walmart charges a maximum fee of $1 per money order.

Transaction limits also apply to both prepaid cards and money orders. Prepaid cards may have daily spending limits and daily ATM withdrawal limits, which can vary by card and issuer, typically from a few hundred to over a thousand dollars. Most domestic money orders are capped at $1,000 per single order; multiple money orders must be purchased for larger amounts. For transactions totaling $3,000 or more in money orders within a single business day, federal anti-money laundering regulations require the purchaser to provide identification and complete a Funds Transaction Report (FTR). This requires a valid government-issued photo ID.