3rd Party Payment Apps? It Might Be Illegal To Use Them!

Many remittance providers and money transfer operators are embedding 3rd party payment apps in their own apps to better enable payments. Nothing wrong with that. After all, if remittance consumers have access to payment methods that they are already using like PayPal, Venmo, Square Cash App, etc. then this facilitates a more seamless payment experience.

Except there is one issue. None of these 3rd party payment providers allow their payment app to be used for purposes of MSB (Money Services Business) activities, money transmission or money transmittal, without obtaining prior permission from the 3rd Party Payment App OEM.

Using such 3rd party payment apps in your own payment app or for purposes of MSB related activities is a violation of the terms of service and can be deemed illegal to use.

This short video provides an example of what can go wrong!


Hello. My name is Faisal Khan. I am a banking and payment consultant.

A question I get often for people who are endeavoring in the money transfer business is they want to use things like Zelle or Stripe or Venmo or Square Cash app and they say, oh, you know, we’ll just implement it, etc.. The problem is the terms of service of PayPal, the terms of service of Zelle, Venmo, Square Cash app, do not allow money service businesses activities without obtaining a prior permission from the companies.

So if you may have a license, for example, in one state or you’re sponsored by a license in one state, and what happens is you go and just simply implement Zelle in your app. You open a corporate account and you start implementing Zelle or Square Cash app or Venmo payments or something like that because people can make payments instantly to you. But unbeknownst to you or maybe known to you, you’re violating the terms of service of that company. Square Cash app can seize your account. Likewise, so can Paypal and even Venmo can do it.

I actually have a client who did the same thing. $5,000 of theirs got stuck. It has been over six months now. They’re still contracting and negotiating with Paypal, and even the money will eventually come out. But you know, six months and $5,000 – that’s not a pretty sight.

So if you’re going to be implementing third party payment apps in your app for cross-border money transfer, make sure you have it in writing from them that you are allowed to do this because else your money will be stuck, it may be confiscated. It will be returned to you, but it will be a pretty long period before you get it back. So make sure you have it in writing. Make sure you take prior permission.

In case you want to read up on this thing, for example, if you want to read up where does it say. Always go to terms of service and look under prohibited services and under prohibited services, you will see all the names like, you know, money services businesses, cash, remittances, money orders, money transfers, etc. And this is where remittances and cross-border also falls under the same thing as a money services or money transmission or transmittal services. So make sure you read up on it before you implement it.

If you have any other questions or comments, please feel free to ask in the contact form below and I’ll be happy to answer. Till next time, have a good one.

This page was last updated on September 1, 2022.

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