The payroll industry is entering a new era of regulatory complexity, thanks to the Money Transmitter Modernization Act (MTMA). As state-by-state rules evolve, Rollfi’s robust licensing and deep banking relationships—backed by Priority—make it the go-to infrastructure partner for payroll providers seeking compliance and scalability.
The Payroll Industry’s Shifting Regulatory Terrain
Payroll processing has always been a highly regulated business, but the MTMA is changing the game. Traditionally, payroll companies were often exempt from state money transmitter laws. Now, as more states adopt the MTMA, many payroll providers find themselves newly classified as money transmitters. This means they must secure licenses, post bonds, and meet liquidity standards that were previously reserved for traditional payment processors.
The MTMA, created by the Conference of State Bank Supervisors (CSBS), is intended to bring consistency to money transmission regulation across the U.S. However, adoption is uneven:
Some states have adopted the MTMA but specifically exclude payroll processors from its requirements.
Others include payroll companies under the law, requiring them to obtain money transmitter licenses.
Several states are still undecided, resulting in a confusing patchwork of rules.
This inconsistency forces payroll providers to track a maze of licensing thresholds, net worth requirements, and agent reporting rules—an especially tough challenge as remote work blurs the lines of where employees (and thus legal obligations) are located.
Key Compliance Challenges for Payroll Providers
Multi-State Licensing Headaches
Payroll providers must now monitor licensing requirements everywhere their clients’ employees work. For example, a New York payroll company with clients employing remote workers in Texas (an MTMA adopter) and Wisconsin (a non-adopter) faces different obligations in each state. Failing to comply can be costly—some states impose retroactive penalties of up to $25,000 per violation for unlicensed activity.
Bank Partnership Pressures
Banks are tightening standards for payroll providers, especially when it comes to handling client funds between payroll cycles. Increased scrutiny from the FDIC and OCC means:
Banks demand robust reconciliation processes.
They prefer partners who can prove MTMA compliance.
Some banks are even scaling back relationships with providers operating in states where the legal landscape is unclear.
Rising Operational Costs
All of this adds up. Smaller payroll providers report compliance costs rising by 40-60%, driven by:
Licensing fees that can reach millions for nationwide coverage.
Bonding requirements ranging from $100,000 to $500,000, depending on transaction volume.
Annual audit preparation costs that often exceed $50,000 for multi-state operators.
The Best of Both Worlds
Rollfi stands out in this challenging environment by combining the nimbleness of a startup with the muscle of Priority, one of the country’s leading payments companies (NASDAQ: PRTH), which processes over $130b annually.
As a division of Priority, Rollfi benefits from:
Nationwide Money Transmitter Licenses: Rollfi can legally operate in all 50 states, eliminating the compliance uncertainty that slows down less-prepared vendors.
Top-Tier Banking Partnerships: Access to a syndicate of Tier 1 and money center banks ensures seamless, secure payroll processing.
This unique positioning allows Rollfi to offer:
Instant regulatory coverage for payroll and benefits, no matter where your clients or their employees are located.
Reduced risk of operational disruption from shifting state laws or retroactive penalties.
Peace of Mind that your key infrastructure is compliant
About Rollfi
Rollfi empowers banks, vertical SaaS platforms, accounting firms, and fintechs to add payroll and benefits to their offerings through white-label solutions and robust APIs. With Rollfi’s infrastructure, businesses can unlock new revenue, boost customer retention, and gain valuable payroll data insights. Fast deployment and full regulatory coverage make Rollfi the easiest way to turn your platform into a one-stop shop for essential business services.
The payroll industry is entering a new era of regulatory complexity, thanks to the Money Transmitter Modernization Act (MTMA). As state-by-state rules evolve, Rollfi’s robust licensing and deep banking relationships—backed by Priority—make it the go-to infrastructure partner for payroll providers seeking compliance and scalability.
The Payroll Industry’s Shifting Regulatory Terrain
Payroll processing has always been a highly regulated business, but the MTMA is changing the game. Traditionally, payroll companies were often exempt from state money transmitter laws. Now, as more states adopt the MTMA, many payroll providers find themselves newly classified as money transmitters. This means they must secure licenses, post bonds, and meet liquidity standards that were previously reserved for traditional payment processors.
The MTMA, created by the Conference of State Bank Supervisors (CSBS), is intended to bring consistency to money transmission regulation across the U.S. However, adoption is uneven:
Some states have adopted the MTMA but specifically exclude payroll processors from its requirements.
Others include payroll companies under the law, requiring them to obtain money transmitter licenses.
Several states are still undecided, resulting in a confusing patchwork of rules.
This inconsistency forces payroll providers to track a maze of licensing thresholds, net worth requirements, and agent reporting rules—an especially tough challenge as remote work blurs the lines of where employees (and thus legal obligations) are located.
Key Compliance Challenges for Payroll Providers
Multi-State Licensing Headaches
Payroll providers must now monitor licensing requirements everywhere their clients’ employees work. For example, a New York payroll company with clients employing remote workers in Texas (an MTMA adopter) and Wisconsin (a non-adopter) faces different obligations in each state. Failing to comply can be costly—some states impose retroactive penalties of up to $25,000 per violation for unlicensed activity.
Bank Partnership Pressures
Banks are tightening standards for payroll providers, especially when it comes to handling client funds between payroll cycles. Increased scrutiny from the FDIC and OCC means:
Banks demand robust reconciliation processes.
They prefer partners who can prove MTMA compliance.
Some banks are even scaling back relationships with providers operating in states where the legal landscape is unclear.
Rising Operational Costs
All of this adds up. Smaller payroll providers report compliance costs rising by 40-60%, driven by:
Licensing fees that can reach millions for nationwide coverage.
Bonding requirements ranging from $100,000 to $500,000, depending on transaction volume.
Annual audit preparation costs that often exceed $50,000 for multi-state operators.
The Best of Both Worlds
Rollfi stands out in this challenging environment by combining the nimbleness of a startup with the muscle of Priority, one of the country’s leading payments companies (NASDAQ: PRTH), which processes over $130b annually.
As a division of Priority, Rollfi benefits from:
Nationwide Money Transmitter Licenses: Rollfi can legally operate in all 50 states, eliminating the compliance uncertainty that slows down less-prepared vendors.
Top-Tier Banking Partnerships: Access to a syndicate of Tier 1 and money center banks ensures seamless, secure payroll processing.
This unique positioning allows Rollfi to offer:
Instant regulatory coverage for payroll and benefits, no matter where your clients or their employees are located.
Reduced risk of operational disruption from shifting state laws or retroactive penalties.
Peace of Mind that your key infrastructure is compliant
About Rollfi
Rollfi empowers banks, vertical SaaS platforms, accounting firms, and fintechs to add payroll and benefits to their offerings through white-label solutions and robust APIs. With Rollfi’s infrastructure, businesses can unlock new revenue, boost customer retention, and gain valuable payroll data insights. Fast deployment and full regulatory coverage make Rollfi the easiest way to turn your platform into a one-stop shop for essential business services.