US Money Transmitter License Options

This article will explore the different ways you can obtain a money transmitter license in the US. It is necessary to have such a license in order to legally conduct business as a money transmitter in the country.

The following options are available for obtaining a money transmitter license

In order of difficult (from lowest to highest):


As an affiliate, you don’t hold a license yourself but rather promote the products or services of a licensed company and earn a commission for each sale you generate. You don’t have any legal ownership over the clients you bring in and are not involved in handling their funds. These responsibilities lie with the licensed company, also known as the principal license holder. As an affiliate, you are only responsible for promoting the company’s offerings and bringing in new business.


There are two types of correspondents in the field of money transfer services: foreign correspondents and local (domestic) correspondents.

A foreign correspondent is a company or financial institution based outside of the US that wishes to do business with a principal license holder in the US. This is done through a correspondent agreement, which is a legal contract that outlines how the principal license holder can send transactions to the correspondent and how they will be settled. A foreign correspondent cannot solicit business from the US directly, but rather must receive it from the principal license holder.

On the other hand, a local correspondent is a licensed entity in the same country as the principal license holder that allows for the settlement of transactions between the two parties. Like a foreign correspondent, a local correspondent does not hold any licensure rights on the transaction, but rather is simply a party to a legal contract allowing the transaction to be settled.

In both cases, the principal license holder is the legal owner of the transaction, and neither party can solicit business in the other party’s territory. The flow of funds touches both parties and neither party can assign agents or sublet work to a third party without explicitly mentioning it in the correspondent agreement.

Correspondent / ISO

A Correspondent Agreement combined with an ISO (Independent Sales Organization) Agreement is a way for a company to further sell and promote the products or services offered by a principal license holder. The Correspondent Agreement provides legal protection for the transaction, while the ISO Agreement allows the company to actively market the website or app of the principal license holder in order to drive more business. In this way, the ISO Agreement takes a proactive approach to the marketing and sales efforts of the principal license holder, rather than just passively waiting for transactions to come in.

In both cases, the ISO entity (which may be separate from the correspondent or the same entity) uses its sales and marketing resources to drive traffic to the website or app of the principal license holder. However, the transaction owner will always be the principal license holder and the flow of funds will always pass through the banks of the principal license holder, with the ISO unable to touch the funds or collect them. All sign-ups and other actions must be done through the website or app of the principal license holder, and direct solicitation via any third-party website or app is not allowed.

Authorized Delegate

The Authorized Delegate or Agent program allows a company to act as an agent of a principal license holder, effectively obtaining money transmitter license coverage under the umbrella of the principal license holder. This program allows a company to have its own brand and onboard clients directly on behalf of the principal license holder.

There are three key aspects to the Authorized Delegate program:

  1. The agent onboards clients on behalf of the principal license holder.
  2. The flow of funds and any bitcoins involved must pass through the bank account and bitcoin exchange of the principal license holder.
  3. The products or services offered by the agent must be closely related to those of the principal license holder. This is especially important to the principal license holder, as regulators will want to see that the agent is offering products or services that are closely tied to those of the principal license holder.

Many existing license holders are being scrutinized on their Agent relationships, in light of PreCash (a money transmitter holder company) that was essentially accused by the Texas Regulator of essentially renting their licenses.

The Department of Banking (for Texas) released a supervisory memorandum (1038) on this particular issue:


As a result of this memorandum, all money transmitters in the US had their agent contracts reassessed and where the regulator saw a strong possibility of license rental, the agent relationship was terminated.

In the payments industry, PreCash was the go-to company if one wanted money transmission coverage. As of early 2015, PreCash has exited all agent relationships which they deem would be ruled upon as being license rental, and the very last contracts that they have on file would cease Agent relationship by October 2015.

I’ve written a lot more about the Authorized Delegate Program which can be read here:


A licensed approach needless to say is all about applying for your own money transmitter licenses. A complete list of all US State Regulators can be seen here. In addition to this, you can also read more about obtaining your own license here:

Banking Agent

US banks, whether nationwide or state chartered, are exempt from the requirement to hold money transmitter licenses due to their banking charter. This means that they do not need to obtain a money transmitter license in each state in order to do business.

Banks can also appoint Authorized Delegates or Agents, who are also exempt from the need to obtain money transmitter licenses in each state. As an agent of a bank, you can operate under the bank’s banking charter and are not required to obtain individual licenses in order to do business.

You can read in detail about this process (Banking Agent), which some casually refer to as the FBO (For Benefit Of) Account Relationship: Money Transmitter License: US Remittance & Payments Solution.

This page was last updated on June 1, 2023.

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