If you use PayPal’s or Dwolla’s API to build an app linking payer and payee, do you require a Money Transmitter License, or are you covered by their licensing?
Payments
Asked by Question Bot08/Jul/20121 answer
1 Answer
F
Faisal Khan
Answered 08/Jul/2012
Agree with Peter Berg's answer: Maybe.
One thing for sure, you will need to register with FinCEN.
To avoid the Money Transmitter License requirement, you would need to show an "agent' agreement, whereby the payment entity you work with (e.g. PayPal), clearly has assigned you as an agent to sell/resell their services and/or sell/resell other commercial services, based on their platform. In this case, you would most definitely not require a money transmitter license.
A similar analogy is that of Western Union. The WU Agents are able to avoid the MTL requirement, because Western Union itself assumes that responsibility and assigns each agent under a contracted agreement (something both FinCEN and State level DFIs allow).
The assumption that many start-ups make, that just because they are riding under the umbrella of someone who is already licensed, they can get away with it - is incorrect.
You would need an explicit agreement from PayPal, Dwolla or whomsoever you work with, to show the same to the local DFI office in your state.
One thing for sure, you will need to register with FinCEN.
To avoid the Money Transmitter License requirement, you would need to show an "agent' agreement, whereby the payment entity you work with (e.g. PayPal), clearly has assigned you as an agent to sell/resell their services and/or sell/resell other commercial services, based on their platform. In this case, you would most definitely not require a money transmitter license.
A similar analogy is that of Western Union. The WU Agents are able to avoid the MTL requirement, because Western Union itself assumes that responsibility and assigns each agent under a contracted agreement (something both FinCEN and State level DFIs allow).
The assumption that many start-ups make, that just because they are riding under the umbrella of someone who is already licensed, they can get away with it - is incorrect.
You would need an explicit agreement from PayPal, Dwolla or whomsoever you work with, to show the same to the local DFI office in your state.