The controversy swirling around the application of state money transmitter laws to payments companies just won’t abate. The difficulty stems from state regulators grappling with applying old statutory language to the new world of payments. And it leaves payment companies struggling to keep up with those new interpretations.

Next week the Electronic Transactions Association (ETA) will be facilitating the conversation by hosting a Money Transmitter Policy Day in Washington, D.C. A state regulator and FinCEN representative will speak. I am looking forward to participating by presenting a talk there, on June 2nd, on where things stand in “The Changing Regulatory Landscape”. If you are concerned that the myriad of state money transmitter laws may apply to your business, I hope you will join us.

Historically, the states regulated money transmission companies to protect the “unbanked” – consumers that used non-banks for financial services such as check cashing and wire transfers. The goal was to provide oversight of companies holding consumer money. Regulated companies were required to obtain a state license. The regulated activity typically was defined as selling or issuing stored value or receiving monetary value for transmission. That wording is so broad that it arguably brings within its sweep unintended links in the payments chain, such as independent sales organizations.

Barely a week goes by without another state money transmitter development. Some state legislators are taking a fresh look at their statutes, amending the laws to apply to new technologies, such as virtual currencies. Other states are interpreting existing laws in new ways, focusing the application of the licensing requirements on payment processors. And others are recognizing that the purpose of the money transmitter laws was never to regulate the card processing business. Those regulators are publishing guidance indicating that various arguments support the interpretation that the money transmitter laws do not apply to payment processors.

It will be some time before the issue of the extent to which state money transmitter laws apply to payment processors is settled. A vigilant eye on developments is critical to the payments industry. The policy day organized by the ETA, and panel discussions at other industry conferences, is exactly what is needed to keep the conversation flowing and the industry informed.