Let us start with the very basic question: What is a Money Transmitter License?
Hello. My name is Faisal Khan. I am a banking and a payment consultant.
I have a question in the email today that says ‘What is a money transmitter license and how I get one?’ I’ve done a couple of videos and I’ll put the link in below, where I have explained what a money transmitter license is, and how you can get one, I’ll tell you.
Just very briefly, in the United States, if you are classified as a money services business something which is really, where the state is you know and the state financial regulator wants to regulate you, you would require a license. That license is called a money transmitter license. There are 50 (five zero) licenses in the United States for each state. There is one for Washington D.C. and there are four for the territories of Guam, Puerto Rico, U.S. Virgin Islands etc. and you have to apply for each of them separately. MTL or money transmitter licences are not cheap. They cost a lot of money. They require a lot of paid up capital in places like California, New York,Texas, the paid up capital requirement could be as high as up to two million dollars. Typically they’ll settle between $500,000 and a million. There is audit fee, there’s bonding, surety bonding fee. There are many many challenges and fees and costs associated with it. And it can take a lot of time. It can take anywhere from six to nine months to start getting the licenses initially. And then the, you know, the big three the New York, California and Texas can take up to a year or even two years to get.
How how can you get one? Well, there are many ways. You can apply for one for sure. But there are ways of getting these same regulatory coverage that a money transmitter license offers by working with someone that already has a money transmitter license. We don’t like to use the word rent a license because that is frowned upon in the industry or what you can do as you can collaborate with the existing MTL holder and say ‘hey listen you know you have the licenses. I would like to work with you. How can we partner up and do a revenue share and then we’re upon this thing. I bring the business, you become the program manager, and you handle everything with respect to licensing and compliance and so forth.’ So that’s one way of doing it.
The other way, the other way very quickly is to go to a bank. A bank can provide you legal coverage for licensing under their own charter. Even if it doesn’t matter if it’s a state chartered bank or a federally chartered bank, a banking license can cover you for the entire United States. As far as you know the regulatory requirements is concerned.
So, you can go to a bank or you can go to an existing provider that already has licenses, or you can apply for it yourself. I for one, help companies like startups and incumbents, you know, work, find them banks or existing license providers and see if you can make them work with each other. If you’re interested in something like this, there’s a link below to schedule a call, feel free to schedule one. I’ll be happy to talk to you. Till next time, have a good one.
This page was last updated on December 10, 2019.