MONEY TRANSMISSION ACT: AGENT OF PAYEE REGULATIONS (PRO 07/17)
Under the California Money Transmitter Law (Fin. Code, § 2000 et seq.), a person shall not engage in the business of money transmission in this state unless licensed or exempt. Financial Code section 2010, subdivision (l), exempts from licensing “[a] transaction in which the recipient of the money or other monetary value is an agent of the payee pursuant to a preexisting written contract and delivery of the money or other monetary value to the agent satisfies the payor’s obligation to the payee.” This is referred to as the “agent-of-payee exemption.”
When first enacted in 2015, the scope of the agent-of-payee exemption appeared to apply to marketplaces or other similarly situated entities that functioned as an intermediary between customers (payors) and merchants (payees). Since then, Internet-based commerce has evolved, and payment chains have become longer and more convoluted. The Commissioner has received multiple inquiries about which entities in any given payment chain can qualify as a “payor” or a “payee.” The Commissioner has also received queries about whether certain transactions qualify as transactions for “goods” or “services.”
To provide clarity, the Commissioner seeks public input in developing regulations on the applicability of Financial Code section 2010, subdivision (l), to money transmission transactions. The Commissioner has identified various areas where rulemaking may be appropriate and has formulated questions to assist interested parties in providing input on the rulemaking.
Invitation For Comments
02/08/19 – PRO 07/17 – Money Transmission Act – Agent of Payee Regulations
Comment Period Ends: April 9, 2019.