The question everyone wants to know. How much do money transmitter licenses cost in the US?
We asked this question to over a dozen or so consultants, law firms and compliance specialists and we amalgamated their answer (i.e. the numbers) into a single post: Money Transmitter License Cost: Owning vs Sponsor?
Hello. My name is Faisal Khan. I’m a banking and a payment consultant.
I want to talk today about a question which we get almost on a daily basis. How much does it cost to get our U.S. money transmitter license? Oh, it must be, about $5,000, $10,000, etc. No, it’s not. It’s pretty expensive.
Many people don’t have an idea of why the U.S. money transmitter licenses are so expensive. They just assume because of parallels from, let’s say, Mexico or Canada or EU or somewhere in the UK or elsewhere, that the license cost would be pretty reasonable. They also don’t expect that you need to go get a license in each and every state. And they also cannot comprehend that there is no federal licensing policy and that if you get one license and everything is good and the last thing, they also sometimes get it wrong that if they just get a FinCEN registration, that is the license. All this is not true.
The United States has one of the most rigorous licensing regimes known to man. You require 49 licenses in all states. Montana doesn’t require a license. And then one license for Washington, D.C. You can get licenses for U.S. Virgin Islands, Puerto Rico and Guam, those are separate territories, etc. Those licenses take up to two years to get, the big ones being New York, Texas and California the big three, as we call them.
Typically, you have to have, you know, paid-up capital bonding, net worth, etc. I’m going to include an estimate that was given to me by many, many people, and this is the amalgamated estimate. You know, you have to have a compliance officer, you have to have audits, there will be re-audits, based on the, you know, the discrepancies and inefficiencies in your compliance manual when it was actually implemented, you’ll have to have a compliance officer full time. It takes up to two years to get it. You have to pay for surety bonding, the premiums on that, etc. All that adds up to a cost of over, over 2 million dollars in two years in order to get it.
It’s not a sunk cost because there is the cost of, you know, net worth, you must have a net worth of a million dollars. But if you take that out, then you know you’re looking at at least in two years, you’re looking at an excess of one million dollars that is basically put in and doesn’t come out. And that’s what it costs to get a U.S. money, transmitter license – over 2 million dollars. People, you know, they’re sitting on their desks, they’re hustling, they’re thinking they’re entrepreneurs – oh, you know I’m going to crack this U.S. code… not a big deal, I’m going to find a license provider. No license provider who spent two years of their lives, so many things – got fingerprinted, did audits, put a system in, etc, etc and paid the money is going to give you coverage just like that or give you because you’re good at hustling or you’re a good looking guy or what have you. It doesn’t work that way.
I have linked to an article, a page on our web site which shows graphically and even in a table form some of the costs associated with it and why this is more expensive and this is not, why sponsorship is the way to go, and, you know, if you apply for licenses, why they so expensive. Just so that you have an immediate sense of understanding of what the costs are. Because a lot of people will approach us and others and say, well, you know, how expensive can it be? And then we have to repeat the whole story again and tell them, basically this video essentially, and tell them why it is expensive and so forth.
If you have any other questions or comments, please feel free to ask in the contact link below, I would be happy to answer. Till next time, have a good one.
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This page was last updated on February 4, 2020.