Sorting out the licenses an ATM route actually needs

What to take away

Search results for this question are full of confident answers. This page replaces them with a method and a record of how you reached your answer.

Why no page can answer it

Three variables move the outcome and they combine differently in every case.

The first is your state, and sometimes more than one state if machines cross a line. The second is your model: who owns the machines, who owns the cash in them, who settles, and whether anyone else's money passes through your hands.

The third is what you actually do day to day, which is often not what the paperwork implies.

Change any one of those and the answer can change. That is why an operator down the road with the same machines is not evidence about you.

The categories that come up are finite, and they are worth knowing before you call anyone:

Is a license required? Sometimes, and the deciding fact is whether you move anyone else's money.

An operator that owns the machines and the cash inside them, sets the fee, and transmits for nobody else sits outside the money transmitter definition in many states. An operator that takes another party's money and settles it is usually inside it. That is the direct answer, and the steps below show how to test it.

Step one: write the model down in operational terms

Before any call, write a page describing what happens to a dollar. Who buys the cash, whose account it comes from, who physically loads it, who receives the settlement, who bears the loss if it goes missing, and who the customer's contract is with.

It has to answer six things without ambiguity:

Use plain operational language. Avoid trade shorthand, and avoid describing it the way a machine seller described it to you.

This single page is what you send to everyone. Sending different descriptions to different people is the fastest way to collect answers that contradict each other, and the same description should serve your bank, as the licensing and compliance overview sets out.

Step two: read the federal material yourself

Read FinCEN's guidance on applying the money services business definition to certain ATM owner-operators. It describes how the analysis is approached for particular arrangements. Read it to understand the shape of the question rather than to reach a conclusion about yourself.

Read the FinCEN statement on due diligence for independent ATM owners and operators as well. It is addressed to banks, which is exactly why it is useful: it tells you what your bank is being asked to consider, and therefore what you should have ready.

Neither document is advice to you. Both make step four go better.

Federal registration hangs on the definition of a money services business, not on the size of the route. Registration is made on FinCEN Form 107 and must be renewed every two years.

The money transmitter definition carries a de minimis, and a person who transmits no more than $1,000 for any one person in any one day sits outside it.

Step three: ask your state regulator

Contact your state banking department or money transmitter regulator. Send the one-page description. Ask a specific question: given this arrangement, does this activity require a license or registration in this state, and if so which one.

Ask in writing where you can, so you have their words rather than your notes. Record the date, the office, the person and the answer. If the answer is conditional, write down the condition, because that condition is the thing that will change.

Worked example. One operator, two machines, one on each side of a state line. The New York file goes to the Department of Financial Services, which licenses money transmitters under Banking Law Article 13-B. The Texas file goes to the Texas Department of Banking, which licenses money transmitters under Finance Code Chapter 151.

The two definitions are not the same, so the same page can draw a license application in one state and a short written answer in the other. Where the operator owns the cash and sets the fee, both files are short. Where the operator settles the venue's collections, both files get longer, and the state test decides the outcome.

Step four: ask a qualified adviser

An attorney or compliance professional who works with payments or money services should read the same page and give a view. This costs money and is cheaper than the alternative.

Ask them three things beyond the headline: what would change the answer, what would you have to notify us about, and what records would you want us to keep to show the position was reasonable.

Step five: ask the parties with contractual power

Your processor and your sponsoring bank both impose duties independently of any regulator, and their requirements are real obligations even where no license is involved. Ask each what they require of you, what they need to be told, and how quickly. Get it in writing.

Do not confuse a contractual requirement with a legal one, and do not assume that satisfying one satisfies the other. They are different sources with different consequences, which is the map set out across the compliance material for the route as a whole.

Step six: check the ordinary business registrations

Underneath the payments question sit the mundane ones that still stop you trading: entity formation, tax registration, any local business license, sales tax where consumables are involved, and the permissions the venue itself may need. None of these are exotic and all of them are easy to leave until the week before opening.

Site-level obligations belong here too. The 2010 ADA Standards for Accessible Design include provisions addressing automatic teller machines, so review the 2010 ADA Standards with advice, per site, rather than once for the business.

Step seven: record it so it survives

Put each answer in a register with the question asked, who answered, the date, and what would reopen it. Set a review date. Then attach the trigger list: a new state, a new model, a cash-in-transit partner, a change of processor or bank, a materially larger route.

Growth is the most common trigger and the least noticed, because nothing happens on the day the route becomes a different kind of business. The material on expanding a route is worth reading against this register rather than on its own.

What this changes about how you sell

Until the question is settled, be careful what you tell hosts about your standing. Saying you are licensed, registered or approved when the position is unresolved is a claim you cannot support. Claims made to businesses must be truthful and capable of substantiation.

Keep the language accurate, as the approach in the material on winning hosts sets out. Let your pricing conversation rest on service rather than on status, which is where the pricing guide puts it.

Common questions

Is there a federal ATM operator license?

No. There is no federal ATM operator license. The federal question is about registration as a money services business, and the state question is about a state license. Work steps two to four.

How long does the protocol take?

The reading is an evening. The regulator may take weeks. The adviser depends on their diary. Start it before you buy hardware and it costs you nothing in lost time.

What if the regulator and the adviser disagree?

That is valuable, not alarming. Take both answers back to the adviser, and expect the disagreement to be about how your model was understood rather than about the law.

Can I rely on what the machine distributor told me?

No. They may be right and they carry none of the consequence of being wrong. Use it as a hypothesis to test in steps three and four.