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In this apparently excellent answer it is implied/stated that "closed loop gift cards", such as amazon gift cards are "stored value" such that issuers of more than $1,000 per person per day of them would be considered a money services business (MSB) and must be appropriately registered and must follow certain rules, in particular Know your Customer.

It seems to me that closed loop gift cards are functionally identical to store credit that is frequently given for returned purchases, and also personal IOUs would seem to have very similar properties. While I have never given anyone an IOU for more than $1000 I bet someone has. I would be surprised if many shops do not approach or exceed the $1000 threshold on busy days.

Do the MSB specification of "stored value" include IOUs and store credit? If not, how is stored value defined?

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In store credit and personal IOUs you know the real person you are dealing with and aren't reselling stored value. You also generally aren't laundering crypto into the non-crypto economy anonymously as in the previous question.

In store credit, you are selling a real good or service with regular money to a known person and then taking the good back, usually in an in person transaction, from a known person in a way that can't be used elsewhere (i.e. isn't transferrable). You aren't dealing in money, per se.

Issuing an IOU to a known person as a personal loan on an occasional basis also isn't a money service business if not done on a highly regular, high volume basis (but if it is, then you are a financial institution, basically the same as payday lending).

Trading in IOUs to third-parties, however, a practice that used to be known as "factoring", is a money service business and used to be one of the main things that commercial banks did prior to the 1930s. Commercial lines of credit and credit cards in an environment where banks were less prone to collapse due to innovations like the FDIC, largely ended "factoring" as a major business activity.

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  • 2 of the 3 reasons you give for store credit are also applicable to amazon gift cards: 1) "known person" this is not necessarily any more true here than for the sale of a gift card, either could be in person or remote, with cash or card. 2) non-transferable this is the "closed loop" point about gift cards as I understand it 3) it is the result of a returned trade this does not apply to gift cards and could be the answer. The reasons you give for an IOU would seem to be counted by the line you quoted in the other answer "whether or not on a regular basis or as an organized business concern".
    – User65535
    Jan 4 at 19:50
  • @User65535 Even if its remote, you have to identify yourself to make a purchase on Amazon or similar.
    – ohwilleke
    Jan 4 at 19:58
  • I do not see how that supports the supposition that amazon cards are stored value and store credit is not. You can certainly get store credit from a cash purchase with no KYC process.
    – User65535
    Jan 4 at 20:37
  • @User65535 To make a purchase with currency you have to be there in person.
    – ohwilleke
    Jan 4 at 21:17

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