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Last week, Governor Healey signed An Act relative to the regulation of money transmission by the Division of Banks (H4840), which puts consumer protections in place for Massachusetts residents who use payment apps like Venmo, PayPal, and CashApp -- while also leveling the regulatory playing field for businesses in the banking and finance industry.
“With this new law, consumers in Massachusetts will now have protection when transferring money to friends and businesses through payment apps,” said Governor Maura Healey. “The use of apps like Venmo and PayPal has skyrocketed over the years, with billions of dollars exchanging hands, so the importance of this legislation cannot be understated.”
“The signing of this bill illustrates our administration’s continued commitment to consumer protection,” said Lieutenant Governor Kim Driscoll. “It’s critical that residents using payment apps to send money are protected against fraud and that payment apps comply with our state’s regulations and adopts nationwide standards.”
“We are so excited to see the domestic money transmission bill become law because it will positively impact both consumers and businesses,” said Secretary of Economic Development Yvonne Hao. “In addition to offering protection for those using payment apps here in Massachusetts, the bill also establishes regulatory consistencies for any business offering the same services as banking institutions.”
By modernizing existing Massachusetts law governing money transmission services to reflect the current day marketplace, the Domestic Money Transmission bill brings Massachusetts in line with the rest of the country in protecting consumers engaging in money transfers. This bill establishes a single statutory framework for the licensing, examination and regulation by the Division of Banks (DOB) for all money transmitters, including both foreign and domestic money transmissions, in Massachusetts. Payment apps like Venmo, PayPal, and CashApp will now need to obtain a license and comply with DOB regulations and consumer protection measures.
"Given the popularity of peer-to-peer payment apps and the billions of dollars flowing through them from Massachusetts residents, this bill has been the legislative priority for the Division of Banks,” said Division of Banks Commissioner Mary Gallagher. “We appreciate the industry support on this policy change and thank the Legislature for passing this important consumer protection measure.”
This bill also levels the regulatory playing field across businesses by establishing consistent supervision for non-bank entities offering the same services as banking institutions. Other changes include adopting a model law framework supported by a coalition of state financial regulators that enables regulators across multiple states to collaborate on supervisory and enforcement efforts and maximize resources, known as “networked supervision.” Being able to participate in networked supervision means that Massachusetts is part of an inclusive national system using common policies to prioritize work based on risk and resource availability leading to better consumer protection.
“The Domestic Money Transmission Bill is a win-win for consumers and businesses across the Commonwealth,” said Undersecretary, Office of consumer Affairs and Business Regulation, Layla R. D’Emilia. Not only will consumers now have protection when using apps like Venmo, CashApp, PayPal and others, but businesses will benefit from the move toward uniform nationwide standards that enhance regulatory efficiencies and help reduce the regulatory burden on the industry. Thank you to the Legislature, especially the Chairs of the Financial Services Committee, for the continued support in passing this bill.”
“This bill modernizes the statutory framework needed for the Division to attain accreditation, aligning Massachusetts with national standards and strengthening its ability to effectively oversee and regulate domestic money transmission,” said Representative James Murphy (D-Norfolk), House Chair of the Joint Committee on Financial Services. “It’s a significant step forward in supporting the Division’s strategic objectives and ensuring robust consumer protections across the Commonwealth. I want to express my gratitude to Commissioner Gallagher for her expertise and dedication, which have been essential in shaping this legislation to protect consumers and enhance the state’s financial landscape. I also thank my Committee Chair counterpart, Senator Feeney, for his collaboration on this important issue.”
“As cutting-edge technology continues to provide more ways in which residents of the Commonwealth can make financial transactions, it is critical to adapt our laws and implement new tools to protect consumers transmitting money through third-party applications, such as Venmo, PayPal, and Cash App,” said Senator Paul Feeney (D-Foxborough), Senate Chair of the Joint Committee on Financial Services. “I want to thank my House Co-Chair, Representative Jamie Murphy, the Commissioner of Banks, Mary Gallagher, and the Healey-Driscoll Administration for their steadfast partnership and dedicated advocacy toward closing this consumer protection gap. I am proud of our collective work to protect our residents’ financial transactions from potentially bad actors and ensure we keep pace with emerging trends in the financial services sector.”
"I applaud Governor Healey and the Legislature for providing the Division of Banks with licensing and supervisory authority over money transmission services, which will build upon my office's consumer protection enforcement authority to enhance state oversight of this industry," said Attorney General Andrea Joy Campbell.
