Florida Fines Square for Operating Without a License

Florida regulators have fined the payments startup Square $507,000 for operating in the state without a money transmitter license.

In a July 24 order, the Florida Office of Financial Regulation said Square has been operating as a money transmitter in the state since February 2010 but did not apply for a license until Nov. 13, 2012.

"Specifically the Office finds that [Square's] existing payment processing services including Square Register and stored value/prepaid access card services required a license under Florida law," the regulator said.

Square did not admit any wrongdoing as part of the consent agreement.

The order was first reported by the South Florida Business Journal. Aaron Zamost, a Square spokesman, said by email: "We worked with Florida to resolve our application and receive our license to operate as a money transmitter in the state. We look forward to continuing to help merchants across Florida grow their business."

Critics say state money transmitter licensing requirements have become archaic and are inapplicable to emerging business models, in some cases potentially barring or at least slowing entrepreneurial businesses from entering the payments field.

In January, Illinois regulators sent Square a cease-and-desist letter ordering the startup to stop moving money in the state.

Since launching in 2010, Square has moved beyond offering mobile payment acceptance using a dongle that plugs into smartphones and tablets and has started moving cash through its virtual Wallet.

The San Francisco startup, led by Twitter co-founder Jack Dorsey, has also attempted to replace point of sale hardware for small merchants with its Register product.

Square is also processing transactions for coffee giant Starbucks.