What is a Money Transmitter Bond?
Companies that provide money transfer services or other payment instruments are often required by the state to obtain a surety bond in order to provide a guarantee that the business will comply with all state and industry regulations before a license is issued.
With so many changes and advancements over the years and the rise of electronic money transfer service, regulations have become tighter in order to prevent fraud.
How much does a Money Transmitter Bond cost?
Each state has its standard for coverage with money transfer companies. Your state could require a bond amount as low as $25,000 or up to $300,000. If you are not sure what the bond requirements are in your state for money transfer companies, then we can help you with that information. Request your free quote today, and we will walk you through the process of getting your money transmitter bond. You will typically pay a small percentage of the total bond amount. We can complete your bond paperwork from anywhere so that you can complete your bond requirements and get licensed as soon as possible.
How does a surety bond work?
A money transmitter bond works the same as any surety bond. There are three key parts to any surety bond: the principal, the obligee, and the surety. The principal is the business or individual required to purchase a surety bond. The obligee is the agency requiring the purchase of the bond. The surety is the company that provides the financial backing for the bond.
The obligee sets the required amount of the bond. The principal purchases the bond in the amount required by the surety company. If the obligee believes that there has been any wrongdoing on the part of the principal, they will file a claim against the bond to recoup any loss or damages or to serve as a penalty. The surety will investigate the claim and make the payment to the obligee if necessary. The amount paid will not exceed the total bond amount. The principal is then required to pay that money back to the surety.
If you still have questions about surety bonds, how they work and how you can apply for one, complete the request for a free quote or give us a call. Our licensed agents are ready to help you with the surety bond process so that you can complete your state licensing requirements.