On January 1, 2025, Massachusetts Governor Maura Healey signed into law a new act that will significantly impact the operation of peer-to-peer (P2P) payment applications (such as Venmo and PayPal) within the Commonwealth. The act amends the General Laws of Massachusetts by inserting Chapter 169B, titled “REGULATION OF MONEY TRANSMISSION.” The new law broadens the definition of “money transmission” to include P2P transactions for personal, family, or household purposes, which were previously exempt from regulation. This change brings Massachusetts in line with other states that already regulate P2P transactions, and aims to enhance consumer protection and address inconsistencies between federal and state money transmission laws.
Now, regardless of whether for personal, family or household purposes, these once-exempt P2P transactions fall within the definition of money transmissions, which will allow for uniformity with other states and protect consumers through the implementation of regulations designed to improve and address inconsistencies. The law also requires that applications (such as Venmo and PayPal) be licensed to continue to operate in Massachusetts. This licensure process involves the provision of detailed information about the company’s business operations, financial condition, and key personnel to the Commissioner of Banks. Additionally, Massachusetts money transmitters will be subject to strict regulation, including public disclosure, cooperation with Massachusetts Division of Banks exams (at their expense), and annual renewals. Quarterly reporting to the Commissioner is mandatory and licensees must maintain a tiered minimum net worth and a fully backed trust account with specifically liquid assets. The licensing process involves background checks, financial reviews, and character assessments.
The new law also contains several consumer protection measures, including providing receipts for transactions, maintaining records, and conducting background checks on authorized delegates.
While the act outlines certain exemptions, including for certain governmental agencies and financial institutions, the Commissioner of Banks retains the authority to request documentation to verify eligibility for exemptions. While the new law may introduce additional compliance requirements for P2P payment platforms, it aims to strengthen consumer protection and ensure the stability of the money transmission industry in Massachusetts.
peer-to-peer payment applications, consumer protection, money transmission