Definition and Regulatory Guide
TL;DR
A Remittance Transfer Service Provider (RTSP) is a financial entity that provides electronic transfers of funds requested by a consumer to a designated recipient in a foreign country. Under the CFPB's Remittance Transfer Rule (Regulation E), RTSPs must disclose fees, exchange rates, and delivery timelines upfront and must provide error resolution rights to consumers. They are regulated as Money Service Businesses (MSBs) at the federal level and require state money transmission licenses.
Regulatory Definition of a Remittance Transfer Service Provider
Under the Consumer Financial Protection Bureau's (CFPB) Remittance Transfer Rule (an amendment to Regulation E under the Electronic Fund Transfer Act), a "remittance transfer service provider" is any person or entity that provides remittance transfers in the normal course of its business, regardless of whether the entity is a bank, credit union, non-bank financial institution, or other payment service provider. A remittance transfer is defined as an electronic transfer of funds of more than $15 requested by a consumer primarily for personal, family, or household purposes, sent to a designated recipient in a foreign country.
This definition is deliberately broad: it covers traditional banks, credit unions, money transfer operators (such as Western Union and MoneyGram), online remittance platforms (such as Wise, Remitly, and Xoom), and mobile-first payment apps that facilitate international transfers. Any entity that conducts 100 or more remittance transfers per year is presumed to do so in the "normal course of business" and is subject to the full requirements of the Remittance Transfer Rule. (Entities providing fewer than 100 transfers per year qualify for a small-provider exception.)
The CFPB Remittance Transfer Rule Explained
The Remittance Transfer Rule, which took effect in 2013 and has been updated since, represents the most significant federal consumer protection framework specifically designed for international money transfers. Before its implementation, consumers sending money abroad had no consistent right to upfront fee and rate disclosure, no standardized error resolution process, and no cancellation rights. The rule changed all of this by imposing uniform requirements on all covered remittance transfer providers, regardless of size or business model.
Required Disclosures by RTSPs
Before a consumer authorizes a remittance transfer, the provider must disclose in writing: the total amount of currency to be transferred to the recipient (in the foreign currency); all fees and taxes charged by the provider; the exchange rate to be used; the amount to be received by the recipient in the foreign currency (after fees and exchange rate); and the estimated date of delivery. These disclosures must be clear, conspicuous, and in English (and in other languages if the transaction was conducted primarily in another language). A receipt confirming these details must be provided after the transfer is authorized.
Consumer Rights and Error Resolution
The Remittance Transfer Rule grants consumers important rights. Cancellation rights: a consumer may cancel a transfer within 30 minutes of payment (or longer if the provider allows) and receive a full refund. Error resolution: consumers have 180 days from the disclosed delivery date to report an error (such as non-delivery, late delivery, or incorrect amount delivered). The provider must investigate and resolve the error within 90 days. If an error is confirmed, the provider must correct it by resending the funds, issuing a refund, or crediting the consumer's account. Liability: if the funds are not delivered as disclosed, the provider is liable for damages subject to the rule's provisions.
Federal and State Licensing Requirements
Remittance transfer service providers must be registered with FinCEN as Money Service Businesses (MSBs) and comply with Bank Secrecy Act requirements, including maintaining an anti-money-laundering (AML) program, filing Currency Transaction Reports (CTRs) for cash transactions above $10,000, and filing Suspicious Activity Reports (SARs) when warranted. In addition, most states require a separate money transmission license for providers operating in or serving customers in those states. State licensing requirements vary significantly and represent a substantial compliance burden for smaller providers, which is one factor limiting the number of companies operating in this space.
How to Verify That a Provider Is Legitimate
Before using any international money transfer service, verify its legitimacy through three checks: search the FinCEN MSB registration database (bsa.fincen.gov) to confirm the entity is registered; check your state's financial regulator website to verify the entity holds a valid money transmission license in your state; and review the CFPB's consumer complaint database for patterns of unresolved complaints. Legitimate RTSPs will provide their registration details upon request and will have verifiable customer service contact information. Unlicensed money transfer services pose significant fraud risk and provide no regulatory recourse in case of problems.
Frequently Asked Questions
What is a remittance transfer service provider?
A remittance transfer service provider (RTSP) is any entity that provides international electronic money transfers for consumers in the normal course of business. This includes banks, credit unions, money transfer operators, online platforms, and fintech apps. They are regulated under the CFPB's Remittance Transfer Rule and must be licensed as Money Service Businesses.
What is the CFPB Remittance Transfer Rule?
The CFPB Remittance Transfer Rule (part of Regulation E) requires remittance transfer providers to disclose fees, exchange rates, and delivery amounts upfront, provide cancellation rights within 30 minutes, and investigate and resolve consumer errors within 90 days. It is the primary federal consumer protection framework for international money transfers.
What consumer protections do I have when using a remittance service?
Under the Remittance Transfer Rule, you have the right to: upfront disclosure of all fees, exchange rates, and delivered amounts; a 30-minute cancellation window with full refund; 180 days to report errors; and error investigation and correction within 90 days. These protections apply to all licensed RTSPs serving US consumers.
How can I verify that a money transfer service is licensed and legitimate?
Check FinCEN's MSB registration database at bsa.fincen.gov to confirm FinCEN registration. Check your state's financial regulator website for a valid money transmission license. Review CFPB complaint data. Legitimate services will display their license numbers and provide verifiable contact information.
What is the difference between a bank wire transfer and a remittance transfer provider?
Both move money internationally, but banks primarily use SWIFT wire transfers and are subject to banking regulation rather than specifically the Remittance Transfer Rule (though the rule does apply to banks). Non-bank RTSPs like Western Union or Wise are specifically designed for consumer remittances, often at lower cost and with more transparent pricing, and are the primary target of the Remittance Transfer Rule.
Can I get a refund if I change my mind after sending an international transfer?
Yes. Under the Remittance Transfer Rule, you have the right to cancel within 30 minutes of paying for the transfer and receive a full refund — provided the funds have not yet been picked up or deposited to the recipient. Some providers offer longer cancellation windows. After the funds have been collected by the recipient, cancellation is generally not possible.
What should I do if my international transfer is not delivered correctly?
Report the problem to the provider within 180 days of the promised delivery date. The provider must investigate within 90 days and correct any confirmed error by resending funds, providing a refund, or crediting your account. If the provider does not respond adequately, file a complaint with the CFPB at consumerfinance.gov/complaint.
