Money transmitters facilitate the movement of money between entities, whether individuals or businesses. They do this using wire transfers or electronic funds transfers. Transfers can be done within the same country or across international borders. In the U.S., money transmitters must register with the Financial Crimes Enforcement Network (FinCEN) or state-level agencies. There are also reporting and compliance regulations that money transmitters must comply with.
Money transmitters include several services:
- Funds transfer
- International remittances
- Payment services
- Currency exchange
- Financial services for the unbanked or underbanked
- Compliance and regulation
Regulations for money transmitters vary by region. Some regions will require money transmitters to obtain a license. In the U.S., licenses must be obtained for each state the money transmitter operates in. Common requirements across regions for a license include:
- Registration and application
- Financial requirements
- Background checks
- Compliance program
- Reporting and recordkeeping
- Ongoing compliance and audits
Money transmitters are different from payment processors. Payment processors focus solely on payment remittance for services and goods, while money transmitters provide payment services as a subset of their offerings.
Elon Musk Continues to Accumulates Licenses in U.S.
Elon Musk has obtained his 13th U.S. state money transmitter license. He wants to add money transmitter services to the X platform. These licenses will allow people on X to send money to each other in the same peer-to-peer manner as on PayPal Venmo.
X will need approval from every U.S. state, which can take about 1.5 years and cost millions.
Elon wants X to become an everything app where people can engage in messaging, social media, and conduct their financial lives. Currently, there is no U.S. mobile app that integrates all of these features. In China, WeChat is an example of an app that does provide all of these features.
Snap (a U.S.-based mobile app) tried integrating peer-to-peer payments in 2018 but eventually ended that endeavor. If X succeeds with its financial integrations, it will be in a league of its own, at least in the U.S.
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