{"id":4630,"date":"2019-07-17T16:39:14","date_gmt":"2019-07-17T16:39:14","guid":{"rendered":"https:\/\/www.paymentfacilitator.com\/?p=4630"},"modified":"2021-06-15T16:16:29","modified_gmt":"2021-06-15T16:16:29","slug":"pennsylvania-decision-may-provide-clarity-around-money-transmission-for-payment-facilitators","status":"publish","type":"post","link":"http:\/\/infinicept.com\/payment-facilitator\/archive\/pennsylvania-decision-may-provide-clarity-around-money-transmission-for-payment-facilitators\/","title":{"rendered":"Pennsylvania Decision May Provide Clarity Around Money Transmission for Payment Facilitators"},"content":{"rendered":"\n

A recent decision by a Pennsylvania appeals court may help provide some clarity around the question of when a payment facilitator is a money transmitter.\u00a0<\/strong><\/p>\n\n\n\n

A recent decision by a Pennsylvania appeals court may\nhelp provide some clarity around the question of when a payment facilitator is\na money transmitter. <\/strong><\/p>\n\n\n\n

The decision centers around Givelify, an Indianapolis-based PF\nthat offers donation management software for organizations and enables users to\ndonate money to nonprofit or religious organizations through a smartphone app.\nIt uses Worldpay (formerly Vantiv) to process payments initiated through the\napp. <\/p>\n\n\n\n

According to the opinion<\/a>\nissued by the appeals court, the Pennsylvania Department of Banking and\nSecurities claimed in 2016 that Givelify was operating as a money transmitter\nwithout the proper license, issued a cease-and-desist order and fined the\ncompany. Givelify appealed the order and after a hearing, the department upheld\nits original conclusion. But then in a May ruling, a Pennsylvania appeals court\nreversed that decision.<\/p>\n\n\n\n

According to Andrew Bigart, an attorney with the payments\npractice at law firm Venable LLP, this reversal is encouraging news for payment\nfacilitators. <\/p>\n\n\n\n

\u201cThere has been some confusion in the payments industry on\nthe scope of state money transmitter licensing requirements, particularly for\nsoftware providers and payment facilitators, and the court\u2019s decision provides\nhelpful guidance on the contours of money transmission, at least in\nPennsylvania,\u201d Bigart told PaymentFacilitator. \n<\/p>\n\n\n\n

In the Pennsylvania case, the state agency had determined\nthat Givelify was operating as a money transmitter in violation of the\nPennsylvania Money Transmitter Act (MTA) because \u201cit created a business\nplatform, via its software application, which served as an indispensable part\nof a chain of events through which money was transferred from the donors to the\nrecipients of the donations,\u201d the opinion read.<\/p>\n\n\n\n

The department determined that Givelify was in the money\ntransmission business because its software resulted in that transmission,\nregardless of whether the company controlled the funds directly.<\/p>\n\n\n\n

For its part, Givelify argued that the Pennsylvania law\n\u201capplies only to those entities that actually transmit money, and not to\nentities that cause or request another party to transmit money,\u201d and that\nVantiv was the entity that actually transmitted the funds.<\/p>\n\n\n\n

Upon its review of the case, the appeals court determined\nthat the agency had misinterpreted the Pennsylvania law. <\/p>\n\n\n\n

\u201cOn a basic and critical level, the Commission erroneously\ninterpreted the terminology \u2018engage in the business\u2019 in an overly expansive\nmanner and essentially read it as prohibiting any conduct that contributes\ntoward\u2014or has a tangential involvement with\u2014the concrete and real act of \u2018transmitting\nmoney,\u2019\u201d the decision read.<\/p>\n\n\n\n

\u201cBased upon its most natural reading, former Section 2 of\nthe MTA requires a license when an individual or organization has been \u2018transmitting\nmoney.\u2019 In this regard, the key term in ascertaining the defining\ncharacteristic of the conduct that is proscribed by the statute is \u2018transmitting,\u2019\u201d\nit continued.<\/p>\n\n\n\n

The court then turned to the dictionary for the meaning of\n\u201ctransmitting.\u201d <\/p>\n\n\n\n

\u201cReduced from its gerund form, the verb \u2018transmit\u2019 is\ndefined by Black\u2019s Law Dictionary, in relevant part, as, \u2018To send or transfer\n(a thing) from one person or place to another,\u2019\u201d it said.<\/p>\n\n\n\n

Based on the dictionary definition, the court concluded that\nGivelify was transmitting information that was important for the transaction\nbut was not transmitting the money. This provides useful clarification, Bigart\nsaid. <\/p>\n\n\n\n

\u201cWhile not binding on other jurisdictions, the court\u2019s\nreasoning should help the payments industry by underscoring that entities that\nmerely provide payment instructions, and do not receive funds for transmission,\nare not engaged in money transmission,\u201d he said. <\/p>\n","protected":false},"excerpt":{"rendered":"

A recent decision by a Pennsylvania appeals court may help provide some clarity around the question of when a payment facilitator is a money transmitter. <\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[1015],"tags":[556,643,876,877,937,990],"class_list":["post-4630","post","type-post","status-publish","format-standard","hentry","category-archive","tag-money-transmitter","tag-payment-facilitator","tag-the-payment-facilitator-landscape","tag-the-payment-facilitator-model","tag-vantiv","tag-worldpay"],"acf":[],"_links":{"self":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/4630","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/comments?post=4630"}],"version-history":[{"count":1,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/4630\/revisions"}],"predecessor-version":[{"id":6872,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/posts\/4630\/revisions\/6872"}],"wp:attachment":[{"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/media?parent=4630"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/categories?post=4630"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/infinicept.com\/payment-facilitator\/wp-json\/wp\/v2\/tags?post=4630"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}