Hastings Business Law Journal


State licensing requirements for money transmission businesses involved in international remittances have allowed key players Western Union and MoneyGram to benefit from the high demand for remittances and the lack of competition by enabling these entities to impose inflated prices on migrant consumers. With the growth of remittance flows and the rise of technological innovations, such as Internet and mobile payments, the current state-by-state licensing requirements for money transmission businesses prove to be overly burdensome and expensive and, ultimately, a barrier to entry for small businesses and start-ups. This note proposes to replace the current money-transmitting state licensing framework with a single, federal licensing requirement in order to increase market competition and provide more reasonable prices to consumers. Federal licensing would alleviate the burden of varying state licensing requirements while still allocating to the states control of money transmission businesses through oversight of compliance with state consumer protection regulations.