BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 786
                                                                  Page  1

          Date of Hearing:   May 15, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

               AB 786 (Dickinson) - As Introduced:  February 21, 2013 

          Policy Committee:                              Banking and  
          Finance      Vote:                            12-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill makes various changes to the Money Transmission Act  
          (MTA).  Specifically, this bill:  

          1)Exempts from the MTA a person that delivers payroll money on  
            behalf of an employer to employees.

          2)Revises the minimum net worth requirements so that an  
            applicant or licensee must maintain minimum net worth ranging  
            from $100,000 to $500,000 depending on the estimated or actual  
            transaction volume, as determined by the commissioner of  
            Department of Business Oversight.  Provides the commissioner  
            with authority to increase net worth up to $2,000,000 if the  
            commissioner determines that the higher net worth is necessary  
            to achieve specified purposes.

          3)Enhances enforcement of the MTA by providing the commissioner  
            the authority to bring an action to enjoin a person from  
            violating the MTA.  Additionally, allows the commissioner to  
            seek ancillary relief, including, but not limited to, a claim  
            for restitution, disgorgement or damages on behalf of the  
            persons injured by the act or practice.

           FISCAL EFFECT  

          Minor and absorbable costs to the Department of Business  
          Oversight.

           COMMENTS  

           1)Purpose  .  The last five years have witnessed technological  








                                                                  AB 786
                                                                  Page  2

            changes that have drastically altered the old business model  
            of remittances, as well as the ways in which consumers pay for  
            goods and services.  The traditional model involved visiting  
            the location of a money transmitter agent, but new  
            technologies have completely changed the way in which  
            customers send and use money.

           2)Opposition  .  Think Computer Corporation opposes AB 786.  They  
            argue against capital requirements in a non-banking context,  
            arguing they are ineffective.  They point out that money  
            transmitters do not make loans so capital requirements must be  
            evaluated in a different light.  The argue capital  
            requirements and other restrictions on money lenders have a  
            chilling effect on innovation and investment.  

           3)Background  .  In the brief time since the MTA became law,  
            technological innovation in the payments industry has  
            increased as money transmission has transcended into mobile  
            applications and new point of sale (POS) devices.  As a  
            result, numerous parties have been raising concerns about the  
            MTA and potential unintended consequences of its application.   
            Five years ago the bulk of money transmission activity  
            involved international remittances where the customer would go  
            to a brick and mortar location to send money to friends or  
            family in other countries, now mobile phone users can use apps  
            to pay for goods and services where the customers payment  
            method (credit card or bank account) sends money to the third  
            party provider and then that provider sends payment to the  
            provider of goods and services.




           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081