[benkuhn]

> Most of them are not classified as banks and run without banking licenses and governmental oversight. They are more convenient and cheaper but definitely a little riskier as well.

This is really misleading. (Disclosure: I work for a remittance provider.)

It's true that non-bank money service businesses do not operate as banks, but it's totally false that they "run without... governmental oversight" or are "a little riskier."

The level of government oversight of non-bank MSB's is extreme by the standards of anything but banking. For example in the US, you have to apply to each state government individually for a license to send transfers from that state. It takes years and is extremely onerous. Many of our applications ran into the hundreds of pages of paperwork and were followed by weeks of on-site examinations plus an intensity of financial auditing usually reserved for companies nearing IPO.

(In Europe the situation is better because MSB regulation happens at the EU level. This regulatory difference is a big part of why Europe has a much larger share of great fintech startups compared to other sectors.)

On risk, most regulators require money transmitters to insure their liabilities to customers so that, if they ever collapse, the insurer will be able to make their customers whole. In our case, we never have liabilities to customers (because we pay out instantly) but we still have to buy this insurance... kind of a belt-and-suspenders approach.