Florida Fines Square Over Money Transmitter License

by Mercator Advisory Group 0

Square is facing legal issues once again, this time in Florida as regulators there fined the mobile point-of-sale company for operating in the state without a money transmitter license. Earlier this year, Illinois sent Square a cease-and-desist order because it lacked a state license.

The South Florida Business Journal, which first reported the story, wrote Square was fined $507,000 and accepted the penalty without admitting any wrongdoing. Square actually did apply for a license in November, but the Office of Financial Regulation learned Square already was operating without a license as far back as February 2010.

From the Business Journal:

Under Florida law, companies that offer payment processing services and stored value/prepaid access card services must be licensed with OFR.

The regulator agreed to approve Square’s license in Florida after it paid the fine.

“We worked with Florida to resolve our application and receive our license to operate as a money transmitter in the state,” Square spokesman Aaron Zamostsaid. “We look forward to continuing to help merchants across Florida grow their business with Square.”

Florida’s actions against Square could open up the floodgates for other states to do the same. Square may not hold the funds transmitted in its transactions, but it certainly sells or issues the “payment instrument.” That action was enough for Illinois and Florida to take action. From all accounts, it appears Square settled its issues in Illinois shortly after the cease-and-desist order became public. NetSpend also was issued a cease-and-desist order by Illinois in March for lacking a license.

Click here to read more from the Business Journal.