The cost of your money transmitter bond will be a percentage of the total bond amount. Each state’s government determines the amount required for their bond. Most states have minimum and maximum amounts required for the bond, and the volume of money transmitted usually determines the bond amount. For example, states like Alabama have a minimum of $10,000 for the money transmitter bond, and Kentucky has a maximum of $5,000,000.
Once you’ve determined a bond amount, you will pay a percentage of that to get the bond. This is known as a premium. Surety companies consider various factors to determine the premium you will pay. The main factors for your premium are your credit score, industry experience, and, for larger bonds, your financial standing and your business. Your credit score will have the most significant impact from these factors. If you have a high credit score, you can expect to pay around 1-3% of the total bonded amount, and people who have lower credit scores could pay over 4% of the bonded amount if approved. Money transmitter bonds are considered very risky due to the complexity of the industry, so many surety companies are cautious with their underwriting for who to approve.
We work with over 10 insurance partners with unique underwriting, so we can always offer you the best rate on the market.
Businesses moving or transmitting money or payments from one entity to another might be obligated to obtain a bond as part of their licensing process. This includes various businesses such as wire transfer services, online merchants, and money services businesses, among others. Each state's laws and regulations determine if you need a money transmitter Bond. It's essential to consult your state's department that oversees this industry, such as the Business Licensing Bureau or the Department of Finance. Additionally, in certain states, such as Connecticut, businesses dealing with virtual currency are obligated to register and secure a money transmitter bond. However, some states do not require businesses dealing with virtual currencies to register.
Some common claims that could be made against your bond include theft, fraud, and dishonest actions. To protect your business against such claims, you should operate your business with your customers' best interests in mind while sticking to all legal and ethical standards.
If a claim is filed, the Surety company will initiate an investigation, and if found liable, they will compensate the affected parties up to the bonded amount. It's essential to remember that the Principal, which is you or your company, will be required to reimburse the Surety company for any amount they pay to settle the claim. Therefore, maintaining ethical and legal conduct is a matter of principle and necessary to protect your bond.
Yes, getting a money transmitter bond is possible even with bad credit. Every surety company we partner with has its specialty, and some even specialize in applicants with less-than-ideal credit. That said, money transfer bonds are considered high-risk because of the bonded amount and because the financial industry brings its own risk. Applicants with a bad credit score may have a more challenging time getting a bond and will have to pay a higher premium than those with a great credit score but rest assured. We’ll be able to help get you this bond, no matter your credit history.
It’s crucial to ensure that your money transmitter bond is up to date with your current business to keep your license in good standing. You'll also want to update your bond if there are any changes to your business, like changing your name, address, or business structure. Updating your bond is easy because, for most changes, all that is required is a bond rider form. The bond rider form will modify the existing bond without the need to cancel and purchase a new one. If there are changes to the bond amount or the risk level associated with the business, there may be a premium increase. A simple business name or address change usually does not cost an additional premium.
If there are any changes to your business, you should reach out to the insurance company that is providing your bond, and they will be able to assist you with updating the bond.