A Primer On Money Services Businesses

money services businesses primer


Money Service Businesses or MSB’s are an essential part of today’s society and they continue to evolve and expand their list of solutions to cater to Americans from all walks of life. Chances are high that you have passed by or transacted with at least one MSB in the recent months. According to the US government, you are an MSB if you operate as one or more of the following:

  • Check casher
  • Money transmitter
  • Currency exchanger
  • Issuer, seller or redeemer of money orders, traveler’s checks or stored value
  • Postal service

If you are interested in starting an MSB or learning more about the industry, it’s important to know the many different types of money services businesses and the particular services they provide.

The Types Of Money Services Businesses (MSB)

One of the most common types of MSB’s is the check cashing facility. They offer very similar services as a bank but primarily cater to those who do not have bank accounts themselves. These ‘unbanked’ individuals or even people who simply don’t have access to their current bank account can cash their checks for a minimal fee. Many of these check cashing businesses also offer short-term lending solutions, such as auto title loans and payday loans. These facilities often also provide wire transfer services as well as allow customers to purchase travelers checks and money orders.

Money transmitters or money transfer businesses are another kind of MSB. These businesses primarily offer money orders and wire transfers too. The majority of the time, the sender of the funds pays the transfer fees linked to the transaction. The receiver then withdraws the funds in near real-time. Usually, the further a sender needs to transfer the money, the higher the fees associated with it are.

The most popular type of MSB is the foreign exchange business, especially in locations that are known to be tourist-friendly or experience high traffic. There are countries where this type of service is regulated to banks only, but there are many places where exchanging foreign currency is legal and often offers higher exchange rates than traditional financial institutions. While some facilities offer a flat rate, the more common option is to base rates on the changing global rate. Just like all MSB’s, currency exchange facilities have to follow strict regulations to avoid being part of money laundering operations.

Operating A Money Services Business

As MSB services continue to expand and reach more people in need, so too are the guidelines that govern these types of businesses. Ensuring that you are up to date on current compliance requirements is a must. Having the right tools to execute your transactions is critical to maintaining a good relationship with the regulatory government bodies that oversee the industry.

Those who wish to start an MSB need to study the federal and state laws associated with this type of business in their area. One common requirement across all government offices is flawless record keeping and using the right software to keep proper records.

An effective way to save time and money processing checks for your business is to look into solutions that offer competitive pricing and robust features, like our check processing services at ReliaFund. One feature that MSB’s use regularly is the ability to deposit checks directly from their software since the leading check cashing software packages are already integrated into ReliaFund.

If you need to open a money services business account for your MSB or check cashing business, it can get very difficult. Larger financial institutions are shutting down existing accounts and even more are outright denying applications to open new accounts. Ordinarily, finding an MSB-friendly bank can get very costly due to referral fees in the industry, but ReliaFund has direct access to several banks that are open and accepting of MSB clients. Eager to learn more? Read about our check processing solutions at this link.