Do you have online payment systems such as CashApp, PayPal, Venmo, or Apple Pay? Are you using these online payment systems to receive money while acting in a fiduciary capacity? Do you have a trust account?
Rule 58A .0116(a) requires brokers to deposit all monies received while acting in a fiduciary capacity into a trust or escrow account no later than three banking days following receipt of the funds unless an exception is met.
The Commission is aware that brokers are utilizing online payment systems such as CashApp, PayPal, Venmo, and Apply Pay to transfer funds in brokerage transactions.
Pursuant to Rule 58A .0116(b),
…a broker may only accept custody of a check or other negotiable instrument made payment to the seller of real property as payment for an option or due diligence fee or to the designated agent in a sales transaction for the purpose of delivering the instrument or the seller or designated agent.
These online payment systems are not considered negotiable instruments.
Further, if a broker uses these online payment systems to take custody of funds even if the intent is to assist a customer or their principal with transferring funds to a seller, the broker may be in violation of Commission rules.
However, if a client or consumer would like to use an online payment system to transfer funds, they are permitted to do so. However, the broker/brokerage may not do so without establishing the online payment system as a trust or escrow account per Commission rule requirements.
For more information, contact Regulatory Affairs at 919.719.9180.