What is a Texas Money Services Bond?

Know the difference between the two Money Services Bond today!

Texas Money Services BondThere are two kinds of Money Services Bond that a license applicant or a current license holder needs to obtain as stated in the Texas Finance Code. One is for the Money Transmission License, and the other one is for the Currency Exchange License.

As part of the license application requirement, the Texas Department of Banking, by the Code, requires that the surety bond is posted to:

  • Protect the integrity and safety of the money services industry, as well as the customers and the public.
  • Ensure strict compliance with the provisions of the Finance Code and the rules of The Texas Department of Banking.
  • Serve as an assurance that if a claim arises, the money above services businesses will be able to settle the claim efficiently.

 

Money Services Bond for Money Transmission License

Bond Amount

The bond amount for this type of Money Services is from $300,000 up to $2,000,000. The bond amount can be based on the following:

  • For License Holders – The amount equal to 1% of the Money Transmission business’ total dollar volume of money transmission per year.
  • For License Applicants – The first year of licensure’s projected volume of money transmission within the state.

 

Money Services Bond for Currency Exchange License

Bond Amount

$2,500 – for license applicants or license holders who will be conducting business with the residents of the state only

License Applicants – the bond amount should be more than $2,500 if the applicant will conduct business with individuals from outside the state or the first year of licensure’s projected total dollar currency exchange transactions within Texas.

License Holders – the bond amount should be more than $2,500 if the applicant will conduct business with individuals from outside the state, or the amount equal to one percent of the currency exchange business’ total dollar volume of money transmission per year.

The maximum bond amount is $1,000,000.

 

Conditions for Money Services Bond in Texas

  • Issued by a surety bond company that is authorized in the state such as Surety Bond Authority.
  • The amount of the surety bond must be approved by the Commissioner.
  • The surety bond must be made payable to the Commissioner on behalf of the claimant or directly to the claimant.
  • The surety bond will remain valid until it is canceled. In such case, a 30-day notice is needed.
  • The surety bond will be automatically and simultaneously renewed along with the license.

 

How can I obtain these bonds?

You must send an application to a reputable surety bond company. Once received and assessed, the surety bond company will ask you to submit relevant documents needed for the prequalification process.

During such, an underwriter will evaluate your financial background, business history, and credit score. Those who have excellent credit scores may qualify for a much lower premium. Some can even pay as little as 1%!

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