An Empirical Analysis of the Use of Money Orders, the Payment System of the Poor

Abstract

Although money orders have been available in the United States since the Civil War, until the mid 1970's and the failure of United States Navigation Company and Universal Money Orders, there had been little analysis of the money order market. This study empirically investigates the determinants of money order usage by households. The results of the study, which utilizes two large national samples, indicate that money orders are clearly an inferior good which have a high probability of being purchased by a low income, young, ethnic minority.

Keywords: Payment System, Unbanked, Money Orders