Money Transmitter Businesses - Rise and Regulation During COVID

For the majority of small businesses around the globe, the coronavirus pandemic has been an arbiter of stagnation to say the least; however, certain business types have found themselves in a unique position to grow. Among these, money transmitters are riding a wave of increased consumer reliance on online applications for life tasks ranging from grocery shopping to virtual socializing. Digital wallet and peer-to-peer money transfer applications have seen major increases in users since the beginning of 2020 and are estimated to have nearly doubled the size of their customer base between 2018 and 2020. The leading wallet services (Apple Pay, Google Pay, and Samsung Pay) account for nearly 400 million users*, while money-sharing services (Venmo, Zelle, PayPal, and CashApp) have seen meteoric gains as well.

In this increasingly remote lifespace, entrepreneurs are investing in new and innovative money transmitter businesses at a heavy clip, with the volatile, though ever-rising value of digital currency like Bitcoin helping to fuel what has so far been an electric start to the decade for payment applications and e-wallet services. In a climate of remote necessity and virtualization, the sky is the limit for businesses that can introduce creative wrinkles into a budding industry.

Launching a money transmitter business requires complying with federal, state, and local regulations governing this sort of service. Federally, money transmitter businesses may fall into the category of “Money Service Businesses (MSB)”, a designation that requires them to register as such with the Financial Crimes Enforcement Network (FinCEN) and renew their registration biannually.

On the state level, nearly every state has some version of a money transmitter business (MSB) license, which to obtain requires an application process typically involving the submission of financial statements, a surety bond, a credit and/or background report, business plan, and registrations with the Secretary of State and Revenue authority for that state. Annual renewals are customary for this type of license.

Locally, counties, townships, cities, and towns may impose their own business license and tax registration requirements with fees and obligations based on factors such as number of employees and gross revenue earned.

Whether launching a new business or consolidating and organizing a large portfolio of business licenses, LicenseLogix has the knowledge and tools to make the process fast and headache free. Contact us for a consultation today.


*, "Number of Apple Pay, Samsung Pay and Google Pay contactless payment users in 2018, with a forecast for 2020", Dec. 2020