Money transmitters in California continue to evolve and reap the rewards of a thriving industry. In 2017, the NMLS Money Services Businesses Industry Report reveals that money transmitters in the country handled $1.24 trillion worth of transmissions.
With the development of new payment transfers that includes innovative value-added services, that amount might continue to increase each year.
If you’ve been thinking of joining this booming industry, read on. Below is a comprehensive guide in obtaining a California money transmitter license.
Know the Law
California money transmitter license applicants are encouraged by the California Money Transmitter Division of Department of Business Oversight (DBO) to read the Money Transmission Act before applying for a license.
It is also wise to read the federal laws that pertain to money transmitters as well. This is to have a clear understanding of your legal obligations once licensed.
These legal obligations will all be part of your surety bond condition, so it’s best to know early on what you can and cannot do to avoid future problems.
Money Transmitter License Application
The application process itself involves several steps that the applicant must follow. Here are the said steps:
- Schedule a pre-filing meeting
- Complete the money transmitter application forms
- Pay the necessary application fees
- Obtain a surety bond
- Pre-filing meeting
The money transmitter license applicant must schedule a pre-filing meeting with a Money Transmitter Division staff via email or telephone call. They will explain to you the regulations involved and how to apply for a license in a timely manner. Here are the current Money Transmitter Division personnel that you can schedule a pre-filing meeting with along with their email addresses and telephone numbers:
- Complete the California money transmitter application forms and pay the filing fee
Applicants can conveniently complete the forms through the Nationwide Multistate Licensing System and Registry (NMLS). Here are the steps in completing the required forms:
- Pay the California money transmitter filing fee
The filing fee is $5,000. This non-refundable fee must be paid directly to the California Money Transmitter Division of Department of Business Oversight (DOB).
- Obtain a California money transmitter bond
You can easily APPLY FOR THIS BOND HERE.
A surety bond is an important requirement when acquiring a money transmitter license. In fact, a money transmitter license will not be issued without a bond.
A bond guarantees the faithful performance of the money transmitter to the DOB.
A bond will cover any claim that will be made against the bond that is due to the bonded violations of the money transmitter. The surety (surety bond provider) will verify the claim first before settling it.
The California money transmitter license bond amounts according to Section 2037 of the Money Transmission Act are as follows:
$500,000 to $2,000,000 – Money transmitters that sell or issue payment instruments or stored value
$250,000 to $7,000,000 – Money transmitters that engage in receiving money for transmission
The DOB will determine your bond amount. It will be based on the average daily outstanding payment instrument and stored value obligations in California or the average daily outstanding obligations for money received for transmission in California.
You don’t need to pay the entire bond amount in order to get a money transmitter license bond. You only need to pay a small percentage of it. This will be your bond premium.
Since surety bonds are credit transactions, a money transmitter’s bond premium will depend on his or her credit score.
In short, a good credit score means a cheaper bond premium. Bond premium starts at 1% of the bond amount.
Receive your money transmitter license
The exact waiting period for this license is undetermined. You can check the status of your application through your NMLS account or by calling the DOB directly.