February 4, 2008
Your letter of January 7, 2008, to Superintendent Neiman has been referred to me for review and response. You ask for confirmation by the New York State Banking Department (the "Department") that your client, [---] (“NPN") does not require licensing as a money transmitter under Article XIll-B of the New York Banking Law (the "Banking Law").
Based on the information provided in your letter, I understand that NPN is company that is engaged in the business of arranging for third-party financial institutions to withdraw loan payments from consumers' accounts. NPN manages a biweekly payment program to consumers with loans. Payments are divided in half and withdrawn from the customer checking accounts every two weeks. Thus, 13 payments are made to the lenders in one year, instead of the 12 payments typically made. According to your letter, NPN's customers receive the benefit of savings in interest charges this way. You write that the actual electronic fund transfers are conducted by M&I Marshall & Ilsley Bank ("M&I"), a federally insured, state-chartered, Wisconsin bank, and Metavante Corporation (“Metavante”), a thirdparty servicer.
I also understand from your letter that NPN is incorporated and headquartered outside of New York State and does not maintain any office in New York. It is has no physical presence or agents here. Moreover, NPN does not accept cash from its clients. Rather, its customers cause funds to be transmitted to M&I and then M&I and Metavante forward the funds to the appropriate creditors. M&I and Metavante are also located outside of this State.
Based on the facts as set forth in your letter, I would agree that, under the Department's current interpretations of the Banking Law, NPN is not required to be licensed as a money transmitter in New York State. However, should the facts surrounding NPN activities change, we would be required to revisit this question.
Should you have any questions in this regard, please forward them to my attention.
Very truly yours,