A money transmitter is a business that provides money transfer services or payment services. For those who perform such business, it is compulsory to purchase a money transmitter bond. This bond is needed by companies that use the banking system to transfer, wire, or otherwise send money between parties. The purpose of this bond is that it ensures that the money reaches the intended party safely. If, by any chance, a problem arises, the bond will reimburse the party whose money was mishandled.
Like any surety bond, the money transmitter bond also requires three parties; the obligee, the principal and the surety.
The Obligee is the party that requires the bond.
The Principal is the money transmitter business that purchases the bond. It is the company that provides payment services or sends money from one location to another via the U.S. Federal Reserve banking system.