LEGAL ALERT
April 4, 2012
Georgia Creates New Merchant Acquirer Limited Purpose Bank Charter
On March 28, 2012, Governor Nathan Deal signed into law the Georgia Merchant Acquirer Limited
Purpose Bank Act. 1 The Act, which became effective upon signing, creates a new state charter for
payment card merchant processors. 2 By affording merchant processors bank status as “merchant
acquirer limited purpose banks” (MALPBs) and making them eligible for (but not required to obtain) FDIC
insurance, the Act is intended to enable MALPBs to obtain membership in payment card networks without
a sponsoring bank.
Under the Act, an MALPB may not solicit depositors from the general public or accept deposits from any
person other than the MALPB’s controlling shareholder. These deposits may only be made at one
location within the state of Georgia and cannot be withdrawn by the depositor for payment by check or
similar means to third parties. 3
The Georgia Department of Banking and Finance (the Department) will be the sole regulator of MALPBs,
and though, at least theoretically, an MALPB could apply for FDIC deposit insurance, it would have no
incentive to do so. The permissive insurance application power granted by the Act is provided only for
the MALBP to meet the membership requirements of major card payment systems. The MALPB is
required to maintain a minimum of $3 million in capital at all times.
The limited scope of permitted MALPB activities under the Act is intended to allow companies controlling
an MALPB to avoid classification as a “bank holding company” under the Bank Holding Company Act.
Such classification would not only bring Federal Reserve regulation, but would limit the activities and
investments of any company controlling the MALBP. Because an MALPB is prohibited by the Act from
accepting demand deposits, accepting deposits that may be withdrawn by check by the depositor for
payment purposes, or making commercial loans, the Act seemingly puts MALPBs outside of the definition
4
of a “bank” under the BHCA.

If you have any questions about this Legal Alert, please feel free to contact any of the attorneys listed
below or the Sutherland attorney with whom you regularly work.
Knox Dobbins
Robert J. Pile
Annette L. Tripp
Heather J. Howdeshell
Jason D. Stone
404.853.8053
404.853.8487
713.470.6133
404.853.8117
404.407.5073
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
1
O.C.G.A. § 7-9-1 et seq. The text of the Act can be obtained at http://www.legis.ga.gov/legislation/enUS/display/20112012/HB/898.
2
Id. at §§ 7-9-2(8), (11).
3
Id. at § 7-9-12(a).
4
12 U.S.C. § 1841(c)(1)(B).
© 2012 Sutherland Asbill & Brennan LLP. All Rights Reserved.
This communication is for general informational purposes only and is not intended to constitute legal advice or a recommended
course of action in any given situation. This communication is not intended to be, and should not be, relied upon by the recipient in
making decisions of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult independent
counsel before making any decisions or taking any action concerning the matters in this communication. This communication does
not create an attorney-client relationship between Sutherland and the recipient.
1
www.sutherland.com
Legal Alert: Georgia Department of Banking
and Finance Publishes Proposed Regulations
Regarding Chartering of Merchant Acquirer
Limited Purpose Banks
July 31, 2013
On July 31, 2013, the Georgia Department of Banking and Finance published its first set
of proposed regulations to implement the Georgia Merchant Acquirer Limited Purpose
Bank Act. The Act, which became effective on March 28, 2012, creates a new state
charter for “merchant acquirer limited purpose banks” (MALPBs). [1] These new banks are
eligible for (but not required to obtain) FDIC insurance, thereby facilitating their
membership in payment card networks (e.g., Visa, MasterCard). It is anticipated that
MALPBs will be utilized by payment processors and other participants in the payments
industry to avoid the necessity of establishing separate sponsoring arrangements with
Visa/MasterCard member banks, or to supplement sponsor bank arrangements.
Related People/Contributors
•
•
•
•
B. Knox Dobbins
Robert J. Pile
Brian M. Murphy
Jason D. Stone
Related Practices/Industries
•
•
Banking & Financial Institutions
Payments & E-Commerce,
Please see our prior Legal Alert on the Georgia Merchant Acquirer Limited Purpose Bank
Act here for more information on this new law.
A copy of the Georgia Department’s proposed regulations is available here.
[1] O.C.G.A.
§§ 7-9-2(8), (11).
If you have any questions about this Legal Alert, please feel free to contact any of the attorneys listed
or the Sutherland attorney with whom you regularly work.
ATLANTA
AUSTIN
HOUSTON
LONDON
NEW YORK
SACRAMENTO
WASHINGTON, DC
Legal Alert: Georgia Department of Banking
and Finance Publishes Revised Proposed
Regulations Regarding Chartering of
Merchant Acquirer Limited Purpose Banks
November 6, 2013
On October 31, 2013, the Georgia Department of Banking and Finance published a modified set of
proposed regulations to implement the Georgia Merchant Acquirer Limited Purpose Bank Act. These
regulations are a revised version of the Department’s July 31, 2013 proposed regulations based upon
comments received. The revised regulations reflect significant changes from the July 31 version,
including changes to the Department’s proposed capital requirements for merchant acquirer limited
purpose banks (MALPBs).
The Act, which became effective on March 28, 2012, creates a new state charter for MALPBs.1
These new banks are eligible for (but not required to obtain) FDIC insurance, thereby facilitating their
membership in payment card networks (e.g., Visa, MasterCard). It is anticipated that MALPBs will be
utilized by payment processors and other participants in the payments industry to avoid the necessity
of establishing separate sponsoring arrangements with Visa/MasterCard member banks, or to
supplement sponsor bank arrangements.
Related People/Contributors
•
•
•
•
B. Knox Dobbins
Robert J. Pile
Brian M. Murphy
Jason D. Stone
Related Practices/Industries
•
•
Banking & Financial Institutions
Payments & E-Commerce,
Please see our prior Legal Alerts on the Georgia Merchant Acquirer Limited Purpose Bank Act, and
click here for more information on this new law.
A copy of the Georgia Department of Banking and Finance’s proposed regulations is available here.
If you have any questions about this Legal Alert, please feel free to contact the attorneys
listed under "related people/contributors" above, or the Sutherland attorney with whom
you regularly work.
________________________________________
1O.C.G.A.
§§ 7-9-1 et seq.
ATLANTA
AUSTIN
HOUSTON
LONDON
NEW YORK
SACRAMENTO
WASHINGTON, DC