On 2 January 2025, Massachusetts went from being one of the least regulated states for money transmission to becoming one of the more highly regulated states. Formerly, only entities engaging in foreign money transmission required licensing. Under the newly enacted Money Transmission Act (Massachusetts MTA) (H4840), covered entities will include any entity that sells or issues payment instruments or stored value, as well as any entity that receives money for transmission from a person located in Massachusetts. Such entities will soon be required to obtain a license from, and will be subject to supervision by, the Massachusetts Division of Banks. In signing the Massachusetts MTA into law, Governor Maura Healey expressed that the law is intended to protect Massachusetts consumers “when transferring money to friends and businesses through payment apps.”
The Massachusetts MTA repeals Chapter 169 of the Massachusetts General Laws, which prior law had regulated only money transmission to foreign countries. The Massachusetts MTA will prohibit a covered entity from engaging in, or advertising, “money transmission” services in Massachusetts without a license. The Massachusetts MTA covers peer-to-peer payments apps, as well as stored value cards and checks.
The Massachusetts MTA is closely modeled on the Model Money Transmission Modernization Act (Model Act). It purports to provide consumer protection with respect to, among other things, refunds, provision of receipts, and restrictions on the investment of user funds. The Massachusetts MTA does not, however, adopt the Model Act’s provisions regarding virtual currency.
Massachusetts is one of the last states to regulate domestic money transmission, and approximately half of the states whose laws precede the Massachusetts MTA have adopted a form of the Model Act.
The Massachusetts MTA is due to take effect in September 2025.
