Fintech innovation leads to faster, cheaper cross-border payments.
Cross-border payment services, including remittances, help people send money to friends, family, or business associates in other parts of the world. Usually, a customer will walk into a store or bank, open an app, or log on to a website, provide their and the recipient’s information, and initiate the funds transfer. Digital providers leverage technology to offer users a faster, cheaper, and more transparent way to send money abroad. These services benefit a wide range of Americans: military members serving overseas, parents paying international tuition, people working or volunteering abroad, and small businesses paying foreign suppliers.
Taxing cross-border payments harms everyday Americans and small businesses.
Recent remittance state tax proposals apply to all senders, including U.S. citizens and lawful residents who use regulated channels for ordinary, essential purposes. Many families rely on these payments to help relatives abroad cover housing, food, healthcare, and education. Others use them to fund tuition for children studying overseas or to support faith-based activities like mission trips and humanitarian aid. The tax burden also falls on small businesses that depend on cross-border payments to pay vendors, contractors, or employees, often while operating on thin margins. While some proposals include a refund mechanism, these are complex and rarely used in practice. Military families are especially disadvantaged: claiming a refund requires documentation and a separate state tax filing, a process poorly suited to families managing deployments and frequent relocations.
Keeping transactions in the regulated channels is a national security imperative.
Providers of cross-border payments, both money service businesses and banks, operate under strict Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements under federal law. Every sender is verified, transactions are screened against federal sanctions lists, and suspicious activity is reported to regulators as required by law. Separately, they are licensed at the state and/or federal level and subject to supervision and examination by their relevant regulator.
Keeping transactions in the regulated system is one of the most effective law-enforcement tools available. When costs rise in the formal system, senders shift to informal or unregulated alternatives, and law enforcement loses visibility. While our industry shares the goal of combating illicit finance, multiple state-level cross-border taxes would limit our ability to tackle transnational crime. The U.S. Government Accountability Office found that when Oklahoma imposed a cross-border tax, providers saw lower transaction volumes, with payments shifting to out-of-state or informal channels. Lower transaction volumes also reduce the utility of these proposals as a revenue raiser for state governments.
Additional state-level cross-border payment taxes would create a damaging patchwork.
Congress has already acted to establish a federal cross-border payment tax administered by the U.S. Treasury Department, through the Internal Revenue Service, under a single national framework. State-level taxes would create a damaging patchwork of overlapping and conflicting regimes with different rates, thresholds, and reporting rules, raising costs for providers and confusion for users. Small and mid-sized businesses that rely on cross-border payments would face higher transaction costs, added friction, and potential supply chain disruptions if cross-border payment services are taxed or further constrained at the state level. At least 15 state legislatures rejected cross-border payment tax bills in 2025, recognizing the limited revenue upside and the real harm to consumers and businesses. Good policy should encourage participation in licensed digital channels where transparency and compliance are already built in, rather than adding costs that push activity outside the system.
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The Financial Technology Association (FTA) is a network of fintech industry leaders shaping the future of finance. We champion financial innovation and advocate for policies that expand competition, access, and opportunity.