Regulatory Alerts2005-05-13
Department of Banking Position on Gift Cards Issued by Retail Stores
The Pennsylvania Department of Banking issued a letter determining that a national retailer's closed-system gift card program is exempt from the Check Casher Licensing Act and the Money Transmitter Act. The Department concluded the cards do not qualify as checks or transmittal instruments because they function as merchandise gift certificates sold in the regular course of business. Consequently, the retailer is not required to obtain licenses for money transmission or check cashing, nor is the program considered the acceptance of deposits.
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