Check Sellers, Bill Payers and Proraters

The Check Sellers, Bill Payers, and Proraters Law governs entities who sell checks, drafts or money orders, or receive money as an agent for paying bills, invoices, or accounts. Through licensing, regulation, and oversight of these entities, DFPI supports a healthy and trusted financial marketplace.

The Check Sellers, Bill Payers and Proraters Law (the Law) is contained in Division 3 of the California Financial Code, commencing with Section 12000. The regulations are contained in Subchapter 10 of Chapter 3, Title 10 of the California Code of Regulations, commencing with Section 1770 (10 C.C.R. § 1770, et seq.).

The Law, originally named the Check Sellers and Cashers Law, was enacted in 1947. As enacted, it provided for the licensing and regulatory review of companies and individuals who sold checks, cashed checks, or paid bills on behalf of others. In 1983, the law was amended to no longer require the licensure of check cashers by the Department. Now check cashers are required by law to obtain a permit from the Department of Justice.

Currently, there are four different types of businesses licensed under the Check Sellers, Bill Payers and Proraters Law:

Check Sellers

A check seller sells checks, money orders, or drafts to be used by others for the payment of obligations and the transfer of money. Most checks and money orders are sold by agents who split the check fee with the licensee. The checks are sold through a network of agents such as small markets and check cashing businesses. A check or money order is usually purchased to pay rent, utilities, or some other obligation that must be sent through the mail. In addition, checks are purchased to send money back to a foreign country.

Bill Payers

A bill payer receives money as an agent of an obligor to pay bills. For this service, it receives a fee from the obligor.

General Proraters

General proraters are persons who, for compensation, engage in the business of receiving money or something of value from a debtor for the purpose of distributing the money or something of value among creditors in payment or partial payment of the debtor’s obligations.

Special Proraters

Special proraters pay customers’ bills as part of their management of customers’ affairs, and generally are business agents or managers.

Consumer Information

Licensee Information

Who is required to Obtain a License?

Any individual or corporation who wishes to engage in the business of selling checks, drafts or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices or accounts of such obligor or to accept money in payment of utility bills except as an authorized agent for a utility company must obtain a license from the Department of Financial Protection and Innovation.

Application For License and Requirements for Maintaining a Check Sellers, Bill Payors or Proraters License

The license requirements are set forth in Section 12000, et seq. of the law. The law requires that applicants for Check Sellers licenses maintain a minimum net worth of $500,000 and a $500,000 license bond. Bill Payers and General Proraters must maintain a minimum of $10,000 net worth and a surety bond of $25,000. For those licensees who use agents, the requirements are considerably higher. In addition to the financial and bonding requirements, applicants must demonstrate that they have experience in this type of business, and that they do not have a criminal history or a history of noncompliance with regulatory requirements.

Laws & Regulations

Regulations and Legislation

Publications