Does Stripe or Square-Up act as an "agent" to process money transfer or do they also come under the payment processor license in USA?

In the United States, both Stripe and Square act as payment processors rather than money transmitters. They are exempt from registering as money transmitters under the payment processor exemption. This exemption applies to companies that process payments as their primary business activity, using regulated payment networks like ACH and Fedwire, and have formal agreements with merchants to facilitate payments on their behalf2.

Stripe and Square both partner with banks and financial institutions to process payments, which allows them to operate under this exemption. They do not hold funds in a custodial capacity for extended periods, which is a key characteristic of money transmission. Instead, they facilitate transactions between buyers and sellers, making them payment processors rather than money transmitters.

While they do handle payments, their role is more akin to that of a payment processor, which is distinct from acting as an "agent" in the context of money transmission laws. However, the term "agent" can sometimes be used broadly in legal contexts to refer to entities acting on behalf of others, but in the specific context of money transmission laws, Stripe and Square are primarily classified as payment processors.