A money service business (MSB) is a financial institution that provides services that deal with foreign exchange, money transferring, dealing with virtual currency, as well as issuing and redeeming traveller’s cheques and money orders.
MSBs can be useful and integral to communities with a lack of banks, and therefore financial services, or when an individual’s bank account is terminated and they require assistance. MSBs are also a way for individuals to transfer money to and from others both domestically and internationally.
The speed at which MSBs can process transactions is another advantage over traditional financial institutions. This is due to the level of technology that MSBs can have that are not accessible or used by banks. In addition, working with an MSB can involve less expensive fees compared to using a wire transfer.
In order for an MSB to operate, it must follow the rules and regulations detailed by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Much like a bank, MSBs comply with these rules in order to ensure the security and protection of its customers. On top of excellent customer service, an MSB should encompass advantageous acquirer arrangements and a fee structure that is transparent. This ensures that sensitive customer information is well-protected and not abused.
It should be noted that there exist tensions between MSBs and banks, however. In fact, according to the Royal Bank of Canada (RBC), MSBs are part of a high-risk industry. A business owner who wishes to enroll their MSB with the bank may have to pay additional fees and be subjected to additional reviews.
The reluctance to accept MSBs is not universal. Republic Bank is an example of a bank that is willing to work with MSBs. In fact, the financial institution has a dedicated MSB Division with experts who understand the relationship between the two different financial institutions.
At the time of writing this article, Republic Bank’s MSB Division serves prepaid card programs, money transmission services, online alternative financial service providers, and retail storefront alternative financial service providers.
Another payment acquirer option is First Midwest Bank. The financial institution has a variety of services that pertain to, for example, operating and ancillary accounts, remote deposit capture, as well as zero balance accounts. This is in addition to financing services like revolving lines of credit sweeps, swamping interest rates, and acquisition funding. Fraud prevention and risk mitigation are other services that First Midwest Bank offers to its MSB clients.
It is important to note that MSB owners should be prepared with all the necessary information required before setting up a meeting with bank personnel. MSBs are heavily regulated and must comply with the rules and policies outlined by FINTRAC and other legal entities. Therefore, banks are in need of transparency and excellent communication when it comes to the functions of MSBs and the type of point of sale equipment they propose to use.
To get in touch with an expert and drive your MSB forward, contact Merchant Broker at either 1-888-668-0733 or email@example.com.