April 9, 2019 – Today FIN told the California financial regulator to maintain a narrow focus when regulating payment services. In a regulatory filing, FIN argued that California should affirm that many transactions are exempt from money transmission regulation, stating:

“Regardless of the specifics of the underlying transaction—whether for payment of an insurance premium, a utility bill, a rideshare ride, a short-or-long term property lease, a loan payment, or a television sold by a retailer through an e-commerce platform—the nature of the agent of a payee transaction is the same.  Receipt of funds by the agent extinguishes the payor’s obligation to the payee, no payor funds are at risk, and the transaction is not money transmission.  This holds true whether the agent is a marketplace or a payment processor, or even a payment processor providing services on behalf of a marketplace….

“Attempting to parse out particular transactions would result in an inconsistent and unpredictable regulatory regime.  This would create confusion for consumers and businesses and stifle innovation in financial products and services. [Instead, California should affirm] that these transactions are exempt, consistent with other types of transactions the DBO has exempted because they do not create risks to consumers or other payors. Doing so will ensure that consumers and business are able to benefit from innovative payments services that facilitate commerce and opportunity for millions of Americans and others around the world.”

The California Department of Business Oversight recently requested feedback on the scope of the exemption from money transmission regulation for an “agent of a payee”. The full text of FIN’s response can be found at: http://financialinnovationnow.org/wp-content/uploads/2019/04/fin-comment-letter-on-ca-payee-agency-1061371-final.pdf


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