Prepaid Access
Prepaid access is a FinCEN money services business category covering stored value that can be reached electronically. It splits into two roles with different duties: the provider of prepaid access, which is the programme's principal, and the seller of prepaid access, which sells it at the counter.
Also called: provider of prepaid access · seller of prepaid access
The rules in 31 CFR 1010.100(ff) treat prepaid access as two jobs, not one. A provider of prepaid access is the participant within a prepaid program that agrees to serve as the principal conduit for access to information from its fellow program participants; where no participant has been designated, the provider is identified by which one exercises principal oversight and control — who organised the programme, set its terms, decided which businesses participate, and can start or stop access. That participant registers with FinCEN and carries the programme’s AML obligations.
A seller of prepaid access is the business at the point of sale, and it becomes an MSB on narrower terms: where it sells prepaid access that can be used before customer identification is verified, or where it sells prepaid access to funds exceeding $10,000 to any person during any one day without policies and procedures reasonably adapted to prevent such a sale.
A single company can be both, or either. A retailer selling gift cards is usually only a seller, and may not be an MSB at all if its programme and controls keep it outside the tests. A programme manager that designed the product, chose the issuer and can freeze a cardholder is doing the provider’s job however it is described commercially.
In practice
Provider and seller are two different FinCEN roles with different registration and recordkeeping duties, and collapsing them is the standard error in this area. Only one participant in a programme is the provider — identifying who that is, in writing, before launch is what stops each participant assuming somebody else registered.
Example
A retail chain sells a branded prepaid card designed by a programme manager and issued by a bank. The manager is the provider and registers; the chain is a seller and is an MSB only if its sales cross the $10,000-a-day test or it sells cards usable before identification. Same card, two different analyses.
Commonly confused with
| Term | How it differs |
|---|---|
| Money Transmitter License | Prepaid access is a federal MSB category. Whether a prepaid programme also requires state money transmission licences is a separate question and frequently answered yes. |
| Electronic Money Institution | The EU and UK equivalent concept is e-money, which is an authorisation to issue stored value. Prepaid access is a US regulatory classification, not a licence. |
| Stablecoin | Both are stored value reachable electronically, but prepaid access is a defined FinCEN category with its own tests. A token is assessed under a different set of rules. |
See also
- Money Services BusinessA money services business is a category in US federal law under the Bank Secrecy Act, covering seven capacities: dealer in foreign exchange, check casher, issuer or seller of money orders or traveler’s checks, provider of prepaid access, seller of prepaid access, money transmitter, and the US Postal Service.
- FinCEN RegistrationThe federal filing a money services business makes with FinCEN, on Form 107, to put itself on the Treasury’s MSB register. It must be renewed every two years. It is a notification that the business exists, not an approval of it.
- Check CasherA check casher is a FinCEN money services business category: a person who cashes checks for more than $1,000 for any one person on any day. Federal registration as an MSB and a state check-cashing licence are separate requirements, and neither covers money transmission.
- Dealer in Foreign ExchangeA dealer in foreign exchange is a FinCEN money services business category: a person who exchanges the currency of one country for that of another in an amount greater than $1,000 for any other person on any day. Exchanging currency and transmitting money are different activities with different consequences.
- Electronic Money InstitutionA firm authorized in the United Kingdom or in an EU member state to issue electronic money and to provide payment services. The e-money it issues is a claim its holders have against the institution, redeemable at par and expressly not a deposit, which is why the funds behind it must be safeguarded.
- IssuerThe issuer is the bank or licensed institution that gives a cardholder their card, holds the account the card draws on, decides whether each transaction is approved, and pays the acquirer for the ones it authorizes. It sits on the cardholder’s side of every card payment.