Money Transmitter

A Money Transmitter Bond, also called a Money Remitter Bond, guarantees that a business is licensed and operates by state laws and regulations. Most states require that any business that transfers or remits money must be bonded in order to operate.

In the case of Money Transmitter Bonds, the principal is usually a company who sends money from one location to another via the U.S. Federal Reserve banking system, it is also known as Fedwire. One of these companies who send monetary transmissions is Western Union.

Unfortunately, as the industry grew, many of these companies began practicing unethical and even fraudulent activities. In response to this, a number of groups were established to help the industry. Groups like the National Money Transmitters Association (NMTA) was formed in 1999 as a unified group that would address issues and "improve the maligned image of money transmitters." The Money Transmitter Regulation Association (MTRA) was also formed in 1989 to aid the "efficient and effective regulation of the money transmission industry."

From a surety company\'s viewpoint, transmitter bonds hold an elevated risk compared to other types of bonds. Risk, in the definition of the insuring company, is the chance that they will have to pay out a claim. An insurance company will have to make good on behalf of a company who fails to meet their obligations or performs them poorly.

Transmitter bonds cost about 2.5 times the normal premium for a standard commercial bond. Of course, rates for a transmitter bond may vary depending on the creditworthiness of the applying company and the bonding company involved.

Transmitter bonds are a necessary expense for wire transfer companies. However, along with cost comes the assurance that your money is sent accurately and confidently.