Executive Summary: Money Transmitter License Strategy Options
Strategic Decision Framework: Three-Path Licensing Strategy
Path 1: Own State MTLs (18-24 Months, $2.2M+ Investment)
Best For: Established companies with significant capital and long-term regulatory commitment
- Full regulatory autonomy and brand control
- Direct banking relationships and correspondent agreements
- High barrier to entry creates competitive moat
Path 2: Authorized Delegate/Agent (3-8 Weeks, $10-25K Investment) ⭐ RECOMMENDED
Best For: Most fintech startups and payment companies seeking rapid market entry
- Flow-of-funds control through sub-accounts
- Own KYC/KYB programs with branded customer relationships
- Direct correspondent agreements (co-signed with principal)
- Regulatory track record building for future license applications
- Cost-effective scaling with 12-60 bps revenue sharing
Path 3: Pure API/White-Label (1-4 Weeks, Minimal Investment)
Best For: Companies testing market fit or requiring simple payment processing
- Limited control and regulatory visibility
- No direct customer relationships or compliance ownership
- Difficult graduation path to higher-value models
Strategic Recommendation
The agent/authorized delegate model represents the optimal balance of speed, control, and cost-effectiveness for 80% of companies entering regulated money transmission. It provides substantive operational benefits while building regulatory credibility for future license applications.
Implementation Timeline & Investment
- Fast-track operational: 3-8 weeks vs 18-24 months
- Capital efficient: $10-25K vs $2.2M+ upfront investment
- Revenue sharing: 12-60 bps based on volume tiers
- Consulting investment: $15-18K for expert guidance
This positioning targets high-intent prospects researching licensing options while demonstrating deep expertise in regulatory strategy and implementation pathways.
The Four Key Benefits
Here are the four core capabilities you gain as an agent (authorized delegate) —all of which aren’t possible under a pure API/white‑label model—plus a bonus item on speed:
- Flow‑of‑Funds Control As an agent, you can receive, hold and disburse customer funds in accounts titled to you (often via sub‑accounts the principal sets up). You’re in the direct money‑movement chain, which gives you end‑to‑end visibility and the ability to manage timing, settlement rails and reconciliation yourself.
- Own KYC/KYB Program You onboard and verify customers under your own compliance policies. That means your name appears on all KYC documentation, you set risk thresholds and you own the customer due‑diligence process—versus simply passing data through someone else’s system.
- Direct Correspondent Agreements You negotiate and sign settlement or payout contracts (e.g., with PayPal, Cash App or other remitters) in your own name. The principal co‑signs or authorises you, but the agreement sits on your letterhead and binds you directly.
- Branded Customer Relationship All client‑facing contracts, terms of service and user‑interfaces carry your brand and legal entity. You own the contractual relationship with end‑customers—pricing, SLAs, support level—rather than having customers contract with the principal behind the scenes.
Bonus: Rapid Go‑Live Timeline
Because you’re piggy‑backing off an existing license rather than building one yourself, you can be operational as an agent in 4-8 weeks (often as quickly as 2-3 weeks). That includes due‑diligence, legal paperwork and bank‑account setup—versus the 18–24 months needed to apply for, bond and secure your own state‑by‑state licenses.
Licensing Path Comparison — Expanded Detail
Capability / Right| **Hold Your Own State MTLs
** You are the primary licensee in each state| **Act as an Agent / Authorized Delegate
** You operate under a principal’s license| **Pure API / White‑Label (Non‑Agent)
| **You simply “skin” another provider’s platform | |||
|---|---|---|---|
| Flow of funds | Full control. You may receive, hold and disburse client money directly in your own bank accounts. | Permitted, but supervised. Funds can sit in accounts titled to you (often sub‑accounts) as long as they remain within the principal’s regulatory perimeter. | Prohibited. All money must go straight from the principal to the end‑beneficiary; you never touch the funds. |
| KYC / KYB | Mandatory. You must build and maintain your own customer‑due‑diligence program. | Allowed / expected. You can onboard clients and run KYC/KYB, subject to the principal’s policy and audits. | Not allowed. The principal owns all onboarding and verification; you merely pass through data. |
| Correspondent agreements (e.g., PayPal, Cash App) | Direct signing. You negotiate and execute settlement or payout contracts in your own name. | Direct, but co‑signed. You may contract with correspondents, yet the principal must counter‑sign or formally authorize each agreement. | Principal only. Any correspondent contract must be executed by—and in the name of—the license holder. |
| Customer relationship & branding | Full brand ownership. Contracts, T&Cs and UI carry your logo and legal entity. | “Digital franchise.” Your brand is front‑and‑centre, but must reference the principal license in disclosures. | Masked reseller. Your app may look branded, but legally the customer belongs to the principal. |
| Regulatory track‑record | High. Regulators see you as the licensee—valuable history when expanding. | Medium‑high. Examiners see your transaction data through the principal; useful when you later apply for your own MTLs. | Low. Limited visibility; future license applications start almost from scratch. |
| Access to Banking | You would have to arrange for segregated named account banking to get a fully functioning license. | You would be expected to have a bank account and in some cases, the PLH can provide a sub-account to you. | You would be expected to have a bank account for your financial activities, the Sponsor will provide a settlement account, but funds will only be pushed to your named account. |
| Settlement accounts | Open freely. You establish your own NOSTRO/treasury accounts in any currency. | Open with the principal’s blessing. Often achieved via named sub‑accounts at the principal’s bank. | None. Settlement happens inside the principal’s banking stack. |
| Transactions & Activities Allowed? | Whatever you have filed with the state regulator as part of your business plan. That business plan defines the umbrella coverage of what you would be allowed to conduct as far as business activities are concerned. | The Principal License Holder generally will “program” the activities and transactions allowed into their Authorized Delegate (Agent) Contact with you. |
Typically you are either partially or fully subscribing to the Transactions & Activities allowed to the PLH by the state regulator and/or you can also add to those transactions and activities by adding your own, with the prior approval of the PLH.| You are limited to the Transactions & Activities allowed by the Sponsor via their API. Anything outside of it would generally not be allowed / accommodated.
Implementation timeline| 18–24 months (application prep, bonding, state reviews).| 3–8 weeks (due‑diligence packet → live processing).| 1–4 weeks (API keys and basic compliance checks).
Up‑front cost| ≈ USD 2.2 million (surety bonds, legal, compliance team).| USD 10–25 k onboarding fee. Some solution provider will even charge USD 35k to 50k.| Minimal (usually a setup fee or none).
Ongoing cost| Ongoing compliance staff + annual audits + bond renewals.| → Usually (approximately) USD 5 k per month platform fee plus
→ 12bps (lowest for high volumes, in excess of US$ 50 Million per month)
→ Between US$ 10-30 Million per month 25 bps
→ Anything below US$ 10 Million per month, would hover between 40bps to 60bps.
Needless to day, revenue share, sliding lower as volume grows, but it is also risk dependent.| API usage / volume fees only.
Banking risk (U.S.)| Moderate. Depends on your compliance strength and risk profile.| Low if principal also supplies banking rails; High if your FinCEN‑registered entity must source its own bank without a license.| Very low. Principal’s banking relationships insulate you.
Third Party Audits & Assessments| Required, but over the course of the year or two, whilst you are getting your licenses, the cumulative costs for these add up.
They can cost up to USD 125,000 to 200,000 depending on the number of audits/assessments and the complexities of the systems.| You might be required to have a third party assessment, depending on your setup and the risk it might post to the PLH (Principal License Holder)| Rarely required, but the sponsor can request you to go through an audit if the compliance and risk departments deems it necessary to onboard you.
Typical exit / migration path| —| Graduate to your own licenses in high‑volume states while retaining agent cover elsewhere.
US State Regulators welcome this approach, graduating from Agent to Own License.| Scale → become an Agent → eventually secure own MTLs where justified.
Faisal Khan LLC fees| Can be seen from this table:
https://faisalkhan.com/solutions/licensing/money-transmitter-license-mtl/summary-table-for-us-states-money-transmitter-license-with-costs/| US$ 15,000 to US$ 18,000| US$ 7,500 to US$ 12,500
Conclusion
Navigating money transmitter licensing requires strategic precision and deep regulatory expertise—particularly when weighing the trade-offs between speed, control, and long-term positioning. The authorized delegate path offers a compelling middle ground that most operators overlook or misunderstand, providing genuine operational control while avoiding the capital intensity of full licensure. However, success depends heavily on selecting the right principal license holder, structuring proper agreements, and maintaining compliance standards that support future growth. For companies serious about building sustainable, regulated payment infrastructure, expert guidance through this decision framework isn’t optional—it’s the difference between a costly misstep and a strategic foundation that scales. The regulatory landscape rewards preparation, and the best outcomes come from operators who invest in getting the structure right from day one.