2006 PA 250 created the Money Transmission Services Act (MTSA), to regulate the money transmission services business.
Who is subject to the MTSA?Beginning January 1, 2007, all entities providing money transmission services must obtain the appropriate license from DIFS and comply with the provisions of the MTSA. The phrase “money transmission services” is defined to mean the selling or issuing of payment instruments or closed-loop prepaid access or prepaid access devices or vehicles or the receiving of money or monetary value for transmission. The term does not include the provision solely of delivery, online or telecommunications services or network access. A payment instrument is defined as any electronic or written check draft, money order, travelers check, or other wire, electronic or written instrument or order for the transmission or payment of money. The term does not include any credit card voucher, letter of credit, or tangible object redeemable by the issuer in goods or services.
Who is NOT subject to the MTSA?The MTSA provides for various exemptions. These exemptions are listed under Section 4 of the MTSA. In order to utilize the "agent of payee" exemption defined under Section 4(g) of the MTSA, an entity or licensee must first submit a formal request to the Director of the Department of Insurance and Financial Services. Procedures on how to file for this exemption can be found on the DIFS website.
Does the MTSA apply to foreign currency exchange?No, the MTSA does not apply if the activity conducted is strictly limited to the exchange of currency. If, on the other hand, the entity is not only going to provide currency exchange services, but also engage in the business of money transmission services (such as holding funds in an e-wallet), the entity would need to obtain the appropriate license.