Learn more about money transmitter bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Money Transmitter Bonds?
First, let’s make sure we’re clear on what a money transmitter is. A money transmitter, also called a money transfer service, is a business that transfers funds or payment instruments between unrelated parties via wire transfers, electronic bank transfers, checks, money orders, etc.
A money transmitter bond is a type of license and permit bond. These bonds are also called money remitter bonds, check casher bonds, money services business bonds, or electronic money transfer bonds, depending on the state and the nature of the business.
Requiring a money transmitter to purchase a bond in order to become and remain licensed to operate guarantees that customers won’t suffer a financial loss if the transmitter does not abide by the state’s laws, rules, and regulations in handling their money.
Who Needs Them?
Every state requires money transmitters and money transfer services to be licensed, and every state except for Montana requires such businesses to be bonded. Online businesses that accept electronic payments through PayPal and similar services are also typically required to purchase a money transmitter bond.
How Do They Work?
As with all other types of surety bonds, this type of bond is a legally binding agreement involving three parties:
The state agency requiring the bond is the oblige
The money transmitter is the principal
The company that issues the bond is the surety
The bond is the principal’s pledge to conduct business in a completely legal and ethical manner. It obligates the principal to pay financial damages to claimants harmed by any infraction committed by the principal, such as theft or fraud.
Customers who have been the victim of an unlawful or unethical act committed by the principal have the right to file a claim against the bond. The surety will investigate to make sure the claim is valid. Though the surety will pay any valid claim as a matter of expedience, the principal must then repay the surety.
What Do They Cost?
The required bond amount is established by the obligee and can differ from one state to another. The annual premium for a money transmitter bond is only a small percentage of that bond amount. That percentage is set for each applicant based on the surety’s underwriting standards, with the applicant’s personal credit rating and financial strength being the primary consideration. Applicants with good credit typically pay a premium rate of from 1-4%, while those with poorer credit will usually pay from 5-15%.
Use our convenient online system to apply for a money transmitter bond today.
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