Tex. Fin. Code § 151.301
Section 151.301 – Definitions
(a) This section defines terms that apply to an applicant for or holder of a money transmission license issued under this subchapter.
(b) In this subchapter:
(1) “Currency” means the coin and paper money of the United States or another country that is designated as legal tender and circulates and is customarily used and accepted as a medium of exchange in the country of issuance.
(2) “Electronic instrument” means a card or other tangible object for the transmission, transfer, or payment of money or monetary value, that contains an electronic chip or strip for the storage of information or that provides access to information.
(3) “Money” or “monetary value” means currency or a claim that can be converted into currency through a financial institution, electronic payments network, or other formal or informal payment system.
(4) “Money transmission” means the receipt of money or monetary value by any means in exchange for a promise to make the money or monetary value available at a later time or different location. The term:
(A) includes:
(i) selling or issuing stored value or payment instruments, including checks, money orders, and traveler’s checks;
(ii) receiving money or monetary value for transmission, including by payment instrument, wire, facsimile, electronic transfer, or ACH debit;
(iii) providing third-party bill paying services; or
(iv) receiving currency or an instrument payable in currency to physically transport the currency or its equivalent from one location to another by motor vehicle or other means of transportation or through the use of the mail or a shipping, courier, or other delivery service; and
(B) does not include the provision solely of online or telecommunication services or connection services to the Internet.
(5) “Outstanding” means:
(A) with respect to a payment instrument or stored value, a payment instrument or stored value that has been issued and sold in the United States directly by the license holder, or sold by an authorized delegate of the license holder in the United States and reported to the license holder, that has not yet been paid by or for the license holder; or
(B) with respect to transmission, a money transmission for which the license holder, directly or through an authorized delegate of the license holder, has received money or monetary value from the customer for transmission, but has not yet completed the money transmission by delivering the money or monetary value to the person designated by the customer or refunded the money or monetary value to the customer.
(6) “Payment instrument” means a written or electronic equivalent of a check, draft, money order, traveler’s check, or other written or electronic instrument, service, or device for the transmission or payment of money or monetary value, sold or issued to one or more persons, regardless of whether negotiable. The term does not include an instrument, service, or device that:
(A) transfers money directly from a purchaser to a creditor of the purchaser or to an agent of the creditor;
(B) is redeemed by the issuer in goods or services or a cash or credit refund under circumstances not designed to evade the obligations and responsibilities imposed by this chapter; or
(C) is a credit card voucher or letter of credit.
(7) Repealed by Acts 2015, 84th Leg., R.S., Ch. 75 , Sec. 7, eff. September 1, 2015.
(8) “Stored value” means monetary value evidenced by an electronic record that is prefunded and for which value is reduced on each use. The term includes prepaid access as defined by 31 C.F.R. Section 1010.100(ww). The term does not include an electronic record that is:
(A) loaded with points, miles, or other nonmonetary value;
(B) not sold to the public but distributed as a reward or charitable donation; or
(C) redeemable only for goods or services from a specified merchant or set of affiliated merchants, such as:
(i) a specified retailer or retail chain;
(ii) a set of affiliated companies under common ownership;
(iii) a college campus; or
(iv) a mass transportation system
.(9) “Unsafe or unsound act or practice” means a practice of or conduct by a license holder or an authorized delegate of the license holder that creates the likelihood of material loss, insolvency, or dissipation of the license holder’s assets, or that otherwise materially prejudices the interests of the license holder or the license holder’s customers.
Tex. Fin. Code § 151.301
Section 151.302 – License Required
(a) A person may not engage in the business of money transmission in this state or advertise, solicit, or represent that the person engages in the business of money transmission in this state unless the person:
(1) is licensed under this subchapter;
(2) is an authorized delegate of a person licensed under this subchapter, appointed by the license holder in accordance with Section 151.402;
(3) is excluded from licensure under Section 151.003; or(4) has been granted an exemption under Subsection (c).
(b) For purposes of this chapter, a person engages in the business of money transmission if the person receives compensation or expects to receive compensation, directly or indirectly, for conducting money transmission.
(c) On application and a finding that the exemption is in the public interest, the commissioner may exempt a person that:
(1) incidentally engages in the money transmission business only to the extent reasonable and necessary to accomplish a primary business objective unrelated to the money transmission business;
(2) does not advertise or offer money transmission services to the public except to the extent reasonable and necessary to fairly advertise or offer the person’s primary business services; and
(3) transmits money without a fee as an inducement for customer participation in the person’s primary business.
(d) A license holder may engage in the money transmission business at one or more locations in this state owned, directly or indirectly by the license holder, or through one or more authorized delegates, or both, under a single license granted to the license holder.
Tex. Fin. Code § 151.302
Section 151.303 – Additional Qualifications
In addition to the general qualifications for licensure set forth in Section 151.202, an applicant for a money transmission license must demonstrate to the satisfaction of the commissioner that:
(1) the applicant has and will maintain the minimum net worth required under Section 151.307;
(2) the applicant’s financial condition will enable the applicant to safely and soundly engage in the business of money transmission; and
(3) the applicant does not engage in any activity or practice that adversely affects the applicant’s safety and soundness.
Section 151.304 – Application and Accompanying Fee, Statements, and Security
- An applicant for a money transmission license must submit an application in accordance with Section 151.203.(b) At the time an application for a money transmission license is submitted, an applicant must file with the department:(1) an application fee in the amount established by commission rule;(2) audited financial statements that are satisfactory to the commissioner for purposes of determining whether the applicant has the minimum net worth required under Section 151.307 and is likely to maintain the required minimum net worth if a license is issued; and(3) security that meets the requirements of Section 151.308, and an undertaking or agreement that the applicant will increase or supplement the security to equal the aggregate security required by the commissioner under that section before the issuance of the license and the start of operations.
Section 151.305 – Investigation and Action on Application
The commissioner shall investigate the applicant and act on the application in accordance with Sections 151.204 and 151.205.
Section 151.306 – Temporary License
(a) The commissioner may issue a temporary license to a person that is engaging in money transmission, but has not obtained a license under this subchapter, if the person:(1) certifies in writing that the person qualifies for the license and will submit a completed license application not later than the 60th day after the date the temporary license is issued;(2) submits a recent financial statement acceptable to the commissioner that reflects the minimum net worth required under Section 151.307;(3) provides security that meets the requirements of Section 151.308 in an amount specified by the commissioner, but not less than $300,000;(4) agrees in writing that, until a permanent license is issued, the person will engage only in activities being conducted at existing locations; and(5) pays the application fee and a nonrefundable temporary license fee in the amount established by commission rule.(b) The effective period for a temporary license may not exceed 90 days from the date the license is issued, provided that the commissioner may extend the period for not more than an additional 90 days if necessary to complete the processing of a timely filed application for which approval is likely.
Tex. Fin. Code § 151.306
Section 151.307 – Net Worth
(a) An applicant for a money transmission license must possess, and a money transmission license holder must maintain at all times, a minimum net worth computed in accordance with generally accepted accounting principles of: (1) $100,000, if business is proposed to be or is conducted, directly or through an authorized delegate, at four or fewer locations; or(2) $500,000, if business is proposed to be or is conducted, directly or through an authorized delegate, at five or more locations or over the Internet.(b) The commissioner may increase the amount of net worth required of an applicant or license holder, up to a maximum of $1 million, if the commissioner determines, with respect to the applicant or license holder, that a higher net worth is necessary to achieve the purposes of this chapter based on:(1) the nature and volume of the projected or established business;(2) the number of locations at or through which money transmission is or will be conducted;(3) the amount, nature, quality, and liquidity of its assets;(4) the amount and nature of its liabilities;(5) the history of its operations and prospects for earning and retaining income;(6) the quality of its operations;(7) the quality of its management;(8) the nature and quality of its principals and persons in control;(9) the history of its compliance with applicable state and federal law; and(10) any other factor the commissioner considers relevant.(c) At least 50 percent of the applicant’s or license holder’s total net worth under this section must be tangible net worth.
Tex. Fin. Code § 151.307
Section 151.308 – Security
(a) An applicant for a money transmission license must provide, and a money transmission license holder must maintain at all times, security consisting of a surety bond, an irrevocable letter of credit, or a deposit instead of a bond in accordance with this section.(b) The amount of the required security is the greater of $300,000 or an amount equal to one percent of the license holder’s total yearly dollar volume of money transmission business in this state or the applicant’s projected total volume of business in this state for the first year of licensure, up to a maximum of $2 million.(b-1) The commissioner may increase the amount of security required of an applicant who intends to provide, or a license holder who is providing, third-party bill payments in conjunction with loan acceleration services, up to a total amount of $2 million, by multiplying the amount of security required under this section by a factor of up to two, if the commissioner determines, with respect to the applicant or license holder, that a higher amount of the required security is necessary to achieve the purposes of this chapter based on the factors listed under Section 151.307(b).(b-2) When the amount of the required security exceeds $1 million, the applicant or license holder may, in the alternative, provide security in the amount of $1 million, plus a dollar for dollar increase in the net worth of the applicant or license holder over the amount required under Section 151.307, up to a total amount of $2 million.(c) The security must:(1) be in a form satisfactory to the commissioner;(2) be payable to any claimant or to the commissioner, on behalf of a claimant or this state, for any liability arising out of the license holder’s money transmission business in this state, incurred under, subject to, or by virtue of this chapter; and(3) if the security is a bond, be issued by a qualified surety company authorized to engage in business in this state and acceptable to the commissioner or, if the security is an irrevocable letter of credit, be issued by a financial institution acceptable to the commissioner.(d) A claimant may bring suit directly on the security, or the commissioner may bring suit on behalf of the claimant or the state, either in one action or in successive actions.(e) The commissioner may collect from the security or proceeds of the security any delinquent fee, assessment, cost, penalty, or other amount imposed on and owed by a license holder. If the security is a surety bond, the commissioner shall give the surety reasonable prior notice of a hearing to impose an administrative penalty against the license holder, provided that a surety may not be considered an interested, aggrieved, or affected person for purposes of an administrative proceeding under Section 151.801 or Chapter 2001, Government Code.(f) The security remains in effect until canceled, which may occur only after providing 30 days’ written notice to the commissioner. Cancellation does not affect any liability incurred or accrued during the period covered by the security.(g) The security shall cover claims for at least five years after the license holder surrenders its license or otherwise ceases to engage in activities for which a license is required under this subchapter. However, the commissioner may permit the amount of the security to be reduced or eliminated before that time to the extent that the amount of the license holder’s obligations to the department and to purchasers in this state is reduced. The commissioner may permit a license holder to substitute another form of security when the license holder ceases to provide money transmission in this state.(h) If the commissioner at any time reasonably determines that the required security is insecure, deficient in amount, or exhausted in whole or in part, the commissioner by written order shall require the license holder to file or make new or additional security to comply with this section.(i) Instead of providing all or part of the amount of the security required by this section, an applicant or license holder may deposit, with a financial institution possessing trust powers that is authorized to conduct a trust business in this state and is acceptable to the commissioner, an aggregate amount of United States currency, certificates of deposit, or other cash equivalents that equals the total amount of the required security or the remaining part of the security. The deposit: (1) must be held in trust in the name of and be pledged to the commissioner;(2) must secure the same obligations as the security; and(3) is subject to other conditions and terms the commissioner may reasonably require.(j) The security is considered by operation of law to be held in trust for the benefit of this state and any individual to whom an obligation arising under this chapter is owed, and may not be considered an asset or property of the license holder in the event of bankruptcy, receivership, or a claim against the license holder unrelated to the license holder’s obligations under this chapter.
Tex. Fin. Code § 151.308
Section 151.309 – Permissible Investments
(a) A money transmission license holder must maintain at all times permissible investments that have an aggregate market value computed in accordance with generally accepted accounting principles in an amount not less than: (1) if the license holder has a net worth of less than $5 million, the aggregate face amount of the license holder’s average outstanding money transmission obligations in the United States, computed in the manner prescribed by commission rule; or(2) if the license holder has a net worth of $5 million or more, 50 percent of the amount required by Subdivision (1).(b) Except to the extent limited by Subsection (d), the following constitute a permissible investment for purposes of this section:(1) 40 percent of the receivables due a license holder from authorized delegates resulting from money transmission under this chapter that is not past due or doubtful of collection;(2) cash in demand or interest-bearing accounts with a federally insured depository institution, including certificates of deposit;(3) certificates of deposit or senior debt obligations of a domestic federally insured depository institution that are readily marketable and insured by an agency of the federal government;(4) investment grade bonds and other legally created general obligations of a state, an agency or political subdivision of a state, the United States, or an instrumentality of the United States;(5) obligations that a state, an agency or political subdivision of a state, the United States, or an instrumentality of the United States has unconditionally agreed to purchase, insure, or guarantee and that bear a rating of one of the three highest grades as defined by a nationally recognized organization that rates securities;(6) shares in a money market mutual fund if the mutual fund, under the terms of the mutual fund’s governing documents, is authorized to invest only in securities of the type described by Subdivisions (4) and (5) or permitted by commission rule; and(7) other assets and investments permitted by rule of the commission or approved by the commissioner in writing, based on a determination that the assets or investments have a safety substantially equivalent to other permissible investments.(c) In addition to investments listed in Subsection (b), a permissible investment for purposes of Subsection (a) includes:(1) the security provided under Section 151.308;(2) a surety bond or letter of credit in addition to the security provided under Section 151.308, if the additional surety bond or letter of credit satisfies the requirements of Section 151.308; and(3) that portion of a surety bond maintained for the benefit of the purchasers of the license holder’s outstanding money transmission obligations in another state that is not in excess of the amount of the outstanding obligations in that state, provided:(A) the license holder maintains a surety bond or letter of credit or has on hand other permissible investments, or a combination of investments, in an amount sufficient to satisfy the requirements of Subsection (a) with respect to the outstanding money transmission obligations in this state; and(B) the surety bond is issued by a surety rated within the top two rating categories of a nationally recognized United States rating service.(d) The commissioner, with respect to a license holder, may limit or disallow for purposes of determining compliance with Subsection (a) an investment, surety bond, or letter of credit otherwise permitted by this section if the commissioner determines it to be unsatisfactory for investment purposes or to pose a significant supervisory concern.(e) A permissible investment subject to this section, even if commingled with other assets of the license holder, is considered by operation of law to be held in trust for the benefit of any individual to whom an obligation arising under this chapter is owed, and may not be considered an asset or property of the license holder in the event of bankruptcy, receivership, or a claim against the license holder unrelated to any of the license holder’s obligations under this chapter.
Tex. Fin. Code § 151.309