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A new bill has been signed by Gov. Maura Healey that gives the state’s banking regulators oversight over peer-to-peer payment apps like Venmo, PayPal and CashApp.
The Massachusetts Division of Banks had sought its new powers in order, it said, to protect consumers as part of a concerted push by a number of state banking regulators. Around $22 billion was sent via 172 peer-to-peer transactions in 2022, according to the Division of Banks.
“With this new law, consumers in Massachusetts will now have protection when transferring money to friends and businesses through payment apps,” Healey said in a statement. “The use of apps like Venmo and PayPal has skyrocketed over the years, with billions of dollars exchanging hands, so the importance of this legislation cannot be understated.”
The bill establishes a single statutory framework for the licensing, examination, and regulation by the Division of Banks for all so-called “money transmitters” in Massachusetts. This means that payment apps must now obtain a license and comply with regulations and consumer protection measures.
The bill is based around a model law framework that enables regulators across multiple states to collaborate on supervisory and enforcement efforts and maximize resources, known as “networked supervision.”
Unlike bank customers, users of payment apps aren’t protected by any federal regulation.
“This means, for example, that if your account is hacked or your money transfer is compromised in any way, you are not protected by state oversight and there is little that can be done to right the wrong,” DoB Commissioner Mary Gallagher wrote in an op-ed in Banker & Tradesman in 2024.
“The Domestic Money Transmission Bill is a win-win for consumers and businesses across the Commonwealth,” said Undersecretary, Office of Consumer Affairs and Business Regulation, Layla R. D’Emilia. Not only will consumers now have protection when using apps like Venmo, CashApp, PayPal and others, but businesses will benefit from the move toward uniform nationwide standards that enhance regulatory efficiencies and help reduce the regulatory burden on the industry.”
