From Illinois Business Journal news services
SPRINGFIELD — Third-party payment processors that allow merchants to utilize “smart” technology to process transactions for goods and services will no longer be required to apply for licensure in the state of Illinois.
The change in policy will allow companies like Square Inc., which offers a mobile card payment service, to operate without obtaining licensure under the Illinois Transmitter of Money Act for relevant products. Illinois Department of Financial and Professional Regulation Secretary Bryan A. Schneider initiated this new policy, which is set forth on the department’s website (www.idfpr.com), as a way to foster the availability of safe and innovative payment technologies for Illinois residents.
“Rapidly evolving payment technologies present great benefits for Illinois consumers,” said Secretary Schneider. “To ensure that new technologies are readily available in Illinois, we must establish a regulatory framework that does not impose unnecessary barriers, and the associated costs and delays, to technological innovation. After careful review, the Department has determined that third-party payment processors do not fall under the licensure requirements of TOMA. We hope that this clarification will allow technology innovators to plan with greater certainty and incur less cost associated with regulatory activity.”
In conjunction with the new policy shift, IDFPR is also lifting a January 2013 cease and desist order issued by the Department against Square, Inc. alleging they were in violation of the Transmitter of Money Act for unlicensed use of Square’s payment processing tool, Square Register. After close review, the Department determined that third-party payment processors act as the agent for the merchant accepting and processing funds, activity that does not fall under the definition of transmitting money as specified in TOMA.
IDFPR will not seek fines or penalties for any purported unlicensed use of Square Register or any other comparable mobile card payment service.