Are You a Money Transmitter in Vermont?

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The Banking Department of the Vermont Department of Financial Regulation (the “Banking Department”) recently entered into a consent order with a money transmission licensing applicant (the “Applicant”). The consent order makes it clear that “Vermont does not exempt a payment processor or an agent of a payee from [money transmission] licensure.” According to the Banking Department, the Vermont money transmission law defines money transmission “broadly” to include “receiving money or monetary value for transmission to a location within or outside the United States” and, based on this definition, payment processing and payee agency transactions are money transmission subject to regulation in Vermont.

As a result, the Applicant was required to be licensed to “operat[e] a technology platform to provide an e-commerce marketplace that enables users to buy and sell items online or from their mobile devices” and to “facilitat[e] payments between users who buy and sell items on the platform and offe[r] stored value accounts for platform users.” Vermont’s position is at odds with the recent trend of state banking departments affirming that payee agency or payment processing transactions involving the sale of goods or services are not money transmission subject to licensing and regulation, provided certain conditions are met. As a result, the Vermont consent order could have far reaching implications for consumers, businesses, and payments companies alike.

Please see full Alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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