.png)
This guide focuses specifically on who needs licenses, using business models and fact patterns rather than abstract legal language.
How to Evaluate Whether You Are a Money Transmitter
Most state regulators start with a simple question: do you touch money, even briefly, in any form?
Your company likely needs money transmitter licenses if it:
- Accepts customer funds for the purpose of sending them to third parties.
- Controls funds temporarily—whether for seconds, minutes, or days—before forwarding them.
- Uses accounts or wallets you control to hold customer balances.
- Has customers or recipients in multiple states, moves US based payor money across state lines or internationally.
The duration of control usually matters less than the fact of control. If your system can pause, pool, or reroute funds, regulators will treat that as custody.
8 Business Models That Usually Need Money Transmitter Licenses
Different statutes use different terms, but the same core business models show up in enforcement actions and licensing portfolios. These company types almost always need MTLs somewhere in the U.S.:
1. Remittance Services
Remittance providers accept money from senders and deliver it to recipients domestically or across borders. Well‑known brands like Western Union, MoneyGram, and Wise hold licenses in nearly every state because:
- They receive funds from customers.
- They commit to paying those funds out to designated recipients.
- They operate across multiple states and countries.
This is the textbook case regulators use when explaining money transmission.
2. Cryptocurrency Exchanges, Stablecoins and Wallets
Many crypto businesses meet money transmission definitions because they:
- Receive fiat funds to buy crypto.
- Utilize an on ramp model.
- Receive crypto for conversion or transfer to another wallet.
- Allow customers to send digital assets to third parties.
Most states now treat exchanging, transmitting, or holding cryptocurrency on behalf of others as money transmission, especially if you also touch fiat rails.
3. Mobile and P2P Payment Apps
Peer‑to‑peer payment apps like Venmo and Cash App:
- Hold and control funds during transfers.
- Maintain balances and internal ledger entries.
- Move money between users inside their systems.
Even when transfers feel instant, those moments of control combined with third‑party payouts create money transmission risk.
4. Bill Payment Services
Third‑party bill pay platforms receive customer payments and send them to utilities, lenders, or other creditors. Regulators see that as:
- Taking possession of a consumer’s funds.
- Forwarding those funds to a designated biller.
That intermediary role is usually enough to trigger licensing.
5. Currency Exchange Services
Foreign exchange businesses receive value in one form (for example, USD) and return value in another (for example, EUR or another currency). Many states treat:
- Currency exchange kiosks and online FX platforms.
- Crypto‑to‑fiat and fiat‑to‑crypto conversion services.
as money transmitters or broader money services businesses.
6. Check Cashers
Check cashing businesses take checks from customers and pay out cash. Regulators view this as:
- Receiving monetary value.
- Making that value available in another form.
Licensing frameworks vary, but many check cashers end up under money transmission or money services business regimes.
7. Prepaid Card Issuers and Reload Networks
Prepaid card issuers and reload networks:
- Receive funds to load or reload stored value.
- Hold balances until cardholders spend them.
- Move value when customers transfer or redeem those balances.
Because they control customer funds on stored value instruments, these entities often require money transmitter licenses.
8. Marketplace and Platform Facilitators
Marketplaces and gig platforms can become money transmitters when they:
- Receive a buyer’s funds.
- Hold those funds in platform accounts.
- Release payment to the seller or service provider after some condition is met.
The key risk areas include:
- Holding funds for days or weeks.
- Commingling buyer and seller funds.
- Exercising discretion over when and how payouts occur.
Small design choices—such as when you debit, when you settle, and whose name appears on transaction receipts—can change your licensing profile.
Who Usually Does Not Need a Money Transmitter License
Some entities operate in or around payments without needing their own MTLs, but the details matter.
Common examples:
- Agents of licensed transmitters
In some structures, agents operate under a principal’s license rather than obtaining their own, but these arrangements require careful contracts and disclosures. Some payroll companies can fall under this definition in some states, but not in other states. - Banks and credit unions
Already heavily regulated; most states exempt them from separate MTL requirements, although affiliates may not share that exemption automatically. - Certain payment processors
Processors that never take possession or control of funds and move money directly from customer to merchant may qualify for narrow exemptions. - Government entities
Government agencies generally are exempt when acting in a governmental capacity.
Every exemption is state-specific. A model that qualifies as a pure processor in one jurisdiction may be a licensed money transmitter in another.
Key Questions to Diagnose Your Licensing Footprint
Before assuming you are exempt, walk through these questions:
- Do you receive money or monetary value from customers?
- Are those funds intended for someone else?
- Do you hold or control the funds at any point before they reach the recipient?
- Do you or your customers span more than one state?
- Do you support non‑traditional instruments such as stored value, crypto, or cross‑border transfers?
If you answer “yes” to several of these questions, you likely need money transmitter licenses. The number of licenses will depend on your customer locations, transaction flows, and risk profile, but many companies end up licensed in 40 or more jurisdictions.
Why Getting This Wrong Is Expensive
Running an unlicensed company is illegal.
Operating without required licenses violates both federal and state law. At the federal level, 18 U.S.C. § 1960 makes operating an unlicensed money transmitting business a criminal offense punishable by up to five years in prison. States have their own penalties, which can include substantial fines, cease-and-desist orders, and criminal charges.
Under‑licensing carries additional operational and strategic risks:
- Regulator penalties and fines
- Cease‑and‑desist orders that disrupts business in specific states.
- Reputational damage with regulators, hampering any future regulated activity
- Loss of trust with banks, investors,customers and partners as the regulator actions against a company is usually a public thing
- Future Investor/ Acquirer diligence findings that delay or kill fundraising rounds.
Many founders underestimate how much time licensing will occupy if addressed reactively instead of strategically.
Related: How Much do MTLs Cost?
How FinCEN MSB Registration Fits In
FinCEN MSB registration and state money transmitter licensing work together but serve different purposes in your compliance stack.
FinCEN money services business registration is a federal registration, not a license. When you register as an MSB, you are effectively added to the federal roster of non‑bank money movers in the U.S. so regulators can monitor anti‑money laundering controls and suspicious activity reporting. This registration brings you into the Bank Secrecy Act framework but does not itself authorize you to conduct money transmission.
There is no such thing as a “Federal MTL.” FinCEN MSB registration is not a “federal money transmitter license,” and it does not replace or preempt state licensing. The authority to grant permission to conduct money transmission sits with individual state regulators. Even if you are properly registered as an MSB, operating without required state licenses can still constitute unlicensed money transmission under both state and federal law.
Practical Next Steps if You Likely Need Licenses
If your answers and business model suggest you are a money transmitter, you can move forward in a structured way:
- Get legal opinion on your business model
Work with experienced counsel or licensing specialists to validate that your model meets or is exempted in target states. - Assess readiness
Evaluate corporate structure, networth requirements, compliance leadership, financials, and technology controls MTLs are a heavy lift and you need to be ready. - Plan your documentation
Begin drafting your business plan, policies, and financial projections tailored to money transmission, not just investors.
For definitional background, see What Is a Money Transmitter License (MTL)?, and for costs, timelines, and state strategy, refer to the broader money transmitter license guide for fintech startups.
How Brico Makes MTL Licensing Faster and Easier
Brico built its platform specifically to solve these problems. Instead of treating licensing as a necessary evil that drains resources, Brico transforms it into a streamlined, manageable process.
Automation that eliminates busywork. Brico's platform auto-populates applications across all 50+ state and territory jurisdictions, so you're not manually entering the same company information dozens of times. When you update something once—a new address, an additional key personnel member—it flows through to every relevant application.
Expert guidance built into the workflow. The platform encodes years of licensing expertise into its processes. This isn't generic advice: it's state-specific guidance that reflects how each regulator actually operates.
Real-time tracking and deadline management. Brico's dashboard shows you exactly where every application stands, what's needed next, and what deadlines are approaching. No more spreadsheets tracking 48 different state timelines. No more missed renewal dates that put your licenses at risk.
Ongoing compliance, not just initial licensing. Getting licensed is only the beginning. Brico handles the full lifecycle: renewals, annual reports, and license amendments. Your compliance obligations stay organized and on track without requiring a dedicated internal team.
Faster time to market. Companies using Brico consistently apply for licenses faster than those using traditional methods. When your competitors are still filling out applications, you're already serving customers.
The ROI is straightforward: Brico costs less than hiring a full compliance team or relying on outside counsel, gets you licensed faster, and reduces the risk of application delays or compliance failures that could derail your business.
Ready to discuss your MTL roadmap? Contact Brico to explore how we can help you navigate the licensing process efficiently.
Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or regulatory advice. Brico is not a law firm and does not provide legal counsel. Licensing requirements vary by state and depend on your specific business model and circumstances. You should consult with qualified legal counsel before making any licensing decisions or taking action based on this content.
.png)
.png)