Licensing
Texas money transmitter licensing
If your product receives money from one person in order to send it to another, or holds balances people can spend later, Texas may treat you as a money transmitter. Getting this question wrong is one of the most expensive mistakes a payments startup can make.
Not legal advice. Licensing turns on the exact flow of funds in your product. Confirm your position with the Texas Department of Banking or with counsel. Statute text checked September 2026.
The Texas law
Money services in Texas are governed by the Money Services Modernization Act, Chapter 152 of the Texas Finance Code, which took effect on September 1, 2023 and replaced the former Chapter 151. It is administered by the Texas Department of Banking, and it licenses two activities: money transmission and currency exchange. Parts of it were amended again in 2025. Knowingly engaging in licensable activity without a license is a third-degree felony under Section 152.408.
What counts as money transmission
Section 152.003 defines money transmission as:
- selling or issuing payment instruments to a person located in Texas;
- selling or issuing stored value to a person located in Texas; or
- receiving money for transmission from a person located in Texas.
The definition expressly includes payroll processing services, and excludes providing solely online or telecommunications services or network access. A person is in the business of money transmission if it receives, or expects to receive, compensation for it, directly or indirectly.
In practice, look for these signs:
- Customer funds land in an account your company controls before reaching the recipient.
- You hold balances customers can spend or withdraw later (a stored-value wallet).
- You pay out to third parties on customers' instructions.
- You run payroll or pay contractors on behalf of employers.
Some models fall outside the definition or within an exemption, such as collecting payment as a merchant's agent, or acting for a bank that bears the obligations. The label you give your product does not decide it. The conditions are set out in Texas money transmission exemptions.
Financial requirements
| Requirement | What Chapter 152 says |
|---|---|
| Tangible net worth (§152.351) | Total assets up to $100 million: the greater of $100,000 or 3 percent of total assets. Between $100 million and $1 billion: $3 million plus 2 percent of assets above $100 million. Above $1 billion: $21 million plus 0.5 percent of assets above $1 billion. |
| Security (§152.352) | A surety bond, or a deposit with approval. If tangible net worth is no more than 10 percent of total assets: the greater of $100,000 or 100 percent of average daily money transmission liability in Texas for the last three months, capped at $500,000. If it is more than 10 percent: $100,000. |
| Permissible investments (§152.355) | At all times, permissible investments with a market value at least equal to all outstanding money transmission obligations, held in trust for customers if the licensee fails |
Figures published on some licensing and bond websites predate Chapter 152. Check any number against the current statute and the Department's application materials.
What an application involves
- Apply through NMLS. Texas money transmission applications are made through the Nationwide Multistate Licensing System, using the company form and individual forms for control persons and key individuals.
- Company records and ownership. Formation documents, a certificate of good standing, the corporate structure, and the names and 10-year history of each key individual and person in control. Control starts at 25 percent of voting interests.
- Background checks. Fingerprints for an FBI criminal history check and independent credit reports for control persons and key individuals under Section 152.105.
- Financial statements. Audited financial statements for the most recent fiscal year and the prior two-year period, plus unaudited statements for the latest quarter, unless the commissioner accepts something else.
- A compliance program. Written anti-money-laundering policies consistent with the federal rules, a compliance officer, training and independent testing.
- A business plan and operating details. The services you will offer, proposed authorized delegates and locations, sample contracts and payment instruments, and the banks you will use.
- Security and fees. The bond and the nonrefundable application fee set by Finance Commission rule.
Timeline
Once the Department determines an application is complete, Section 152.106 gives the commissioner 120 days to approve or deny it. If no decision is made in that time, the application is treated as approved, although the commissioner may extend the period for good cause. A denial can be appealed by requesting a hearing within 30 days. The 120 days run only from the date the application is found complete, so missing documents, such as audited financials or a background check response, delay the start of the clock.
After approval
- Quarterly reports of condition within 45 days after each quarter, including permissible investments and transaction data (§152.201)
- Audited financial statements within 90 days after fiscal year-end (§152.203)
- An annual license fee and report (§152.107), with late fees and expiration if missed
- Examinations, notice of changes in key individuals, and approval before a change of control
- Consumer rules on timely transmission, refunds, receipts and payroll disclosures (§§152.301–152.304)
- Bank Secrecy Act reports filed as federal law requires (§152.206)
Operating in other states means a separate license, or an exemption, in each one. Many states have adopted all or part of the Money Transmission Modernization Act, a model law from the Conference of State Bank Supervisors, so requirements are converging but are not identical.
The federal layer
Separately from any state license, most money transmitters must register with FinCEN as a money services business within 180 days of being established, and renew every two years. Registration is not a license, and a license does not replace registration. See FinCEN MSB registration.
Digital assets
Chapter 152 includes certain stablecoins in its definition of money, and the Department of Banking publishes guidance on how it applies the Act to virtual currency. Platforms that hold customers' digital assets can also be subject to Chapter 160. See Texas crypto and stablecoin rules.
Common questions
How much net worth do you need for a Texas money transmitter license?
For a licensee with total assets of $100 million or less, the greater of $100,000 or 3 percent of total assets, under Section 152.351. The commissioner can exempt a licensee from the requirement in whole or part for good cause.
How big is the Texas money transmitter bond?
At least $100,000. A licensee whose tangible net worth is 10 percent of total assets or less needs the greater of $100,000 or its average daily Texas transmission liability, up to $500,000.
Do I need a Texas license if my company is based in another state?
Possibly. The Act looks at whether the customer is in Texas, using the customer's address and your records, not where your company is located.
Does payroll software need a money transmitter license in Texas?
Payroll processing services are included in the definition of money transmission. Software that never receives or controls the funds is in a different position from a provider that does, so map the flow of funds first.
Next, see the compliance checklist for the program a license application expects you to have.
Last reviewed 2026-09-17