Mississippi Money Transmitter Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain Mississippi Money Transmitter Bonds

At a Glance:

• Lowest Cost: $375 per year or $38 per month based on the applicant’s credit
• Bond Amount: Between $25,000 to $500,000 (more on this later)
• Who Needs it: All money transmitters operating in Mississippi
• Purpose: To ensure the public will receive compensation for any damages should the money transmitter fail to comply with licensing law
• Who Regulates Money Transmitters in Mississippi: The Mississippi Department of Banking and Consumer Finance

Background

Mississippi statute 75-15-11 requires all money transmitters operating in the state to obtain a license with the Department of Banking and Consumer Finance. The Mississippi legislature enacted the licensing laws and regulations to ensure that money transmitters engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, money transmitters must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Mississippi Money Transmitter Bond?

Mississippi requires money transmitters to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the money transmitter fails to comply with the regulations set forth in the Mississippi Money Transmitter Act. Specifically, the bond protects the public in the event the money transmitter engages in any acts of fraud or fails to transmit any money owed to consumers. In short, the bond is a type of insurance that protects the public if the money transmitter breaks licensing laws.

How Can an Insurance Agent Obtain a Mississippi Money Transmitter Bond?

BondExchange makes obtaining a Mississippi Money Transmitter Bond easy. Simply login to your account and use our keyword search to find the “money” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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How is The Bond Amount Determined?

Mississippi statute 75-15-11 dictates that the limit on the money transmitter bond must equal the license applicant’s outstanding money transmissions in Mississippi. The bond must have a minimum limit of $25,000 and may not have a limit higher than $500,000.

Is a Credit Check Required for the Mississippi Money Transmitter Bond?

Surety companies will run a credit check on the owners of the money transmission company to determine eligibility and pricing for the Mississippi Money Transmitter bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Mississippi Money Transmitter Bond Cost?

The Mississippi Money Transmitter Bond can cost anywhere between 1.5% to 7.5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $25,000 bond requirement.

$25,000 Money Transmitter Bond Cost

How Does Mississippi Define “Money Transmitter?”

Mississippi statute 75-15-3 defines a money transmitter as any individual or business entity who sells or issues checks or receives money or monetary value for transmission to a location within or outside the United States by any and all means, including but not limited to wire, facsimile or electronic transfer.

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How do Money Transmitters Apply for a License in Mississippi?

Money transmitters in Mississippi must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.

License Period – The Mississippi Money Transmitter License expires on April 1 of each year and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

Applicants for the Mississippi Money Transmitter License must have a company net worth (assets – liabilities) of at least $25,000, plus an additional $15,000 per office location. Applicants must submit a company financial statement, prepared by a CPA, verifying their net worth when submitting their license application.

Step 2 – Purchase a Surety Bond

Money transmitters must purchase and maintain a surety bond (limits outlined above)

Step 3 – Request a NMLS Account

The Mississippi Money Transmitter License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 4 – Complete the Application

All Mississippi Money Transmitter License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

• • Company financial statements
  • The locations of all company authorized agents 
  • Primary company and consumer complaint contact information
  • Company’s FinCEN confirmation number and filing date
  • Company business plan containing the following information:
    • Marketing strategies
    • Products
    • Target markets
    • Fee schedule
    • Operating structure
  • Certificate of Good Standing
  • Specimen copy of the check or payment instrument to be issued or sold
  • Company formation documents

Money transmitters must pay the following fees when submitting their license application:

• • $750 license fee
  • $50 investigation fee
  • $0.25 annual reporting fee for all company authorized agents (the company’s first 100 agents are exempt from this requirement)

How Do Mississippi Money Transmitters Renew Their License?

Money transmitters can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Mississippi Money Transmitter License expires on April 1 of each year and must be renewed before the expiration date.

What are the Insurance Requirements for the Mississippi Money Transmitter License?

Mississippi does not require money transmitters to purchase any form of liability insurance as a prerequisite to obtaining a business license. Money transmitters must purchase and maintain a surety bond (limits outlined above).

How Do Mississippi Money Transmitters File Their Bond?

Money transmitters should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the money transmission company. The surety company should include the following information on the bond form:

• Name and principal address of entity/individual(s) buying the bond
• Surety company’s name and state or incorporation
• Bond amount
• Date the bond is signed

What Can Mississippi Money Transmitters Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, money transmitters in Mississippi must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

• Do not engage in any acts of fraud
• Ensure to transmit all money owed to consumers

What Other Insurance Products Can Agents Offer Money Transmitters in Mississippi?

Mississippi does not require money transmitters to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Mississippi Money Transmitter Customers?

The NMLS conveniently provides a public database to search for active money transmitters in Mississippi. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.