Fintech Groups Oppose Remittance Tax in Budget Bill

Fintech groups are opposing a provision in the budget bill that would impose an excise tax on cross-border money transfers. The tax would be paid by consumers sending the money, but not by U.S. citizens. Industry organizations argue that the tax would harm small businesses and consumers, empower bad actors, and undermine anti-money laundering enforcement. They also object to Americans being required to disclose personal information to avoid paying the tax. The proposal aims to increase revenue but could have unintended consequences for cross-border payments.

Fintech groups have expressed strong opposition to a provision in the current budget bill that would impose an excise tax on cross-border money transfers. The tax, initially proposed as a 5% levy and later reduced to 3.5%, would be paid by consumers sending the money, but not by U.S. citizens [1].

The budget bill, known as the Big Beautiful Bill, was passed by the House of Representatives last week and is currently awaiting a vote in the Senate. The tax proposal has drawn criticism from industry organizations, including the American Fintech Council, the Financial Technology Association, and the Electronic Transactions Association, who argue that it would harm small businesses and consumers, empower bad actors, and undermine effective anti-money laundering enforcement [1].

The proposal would increase costs for pharmacies, grocers, and other small businesses that offer money transfer services. Consumers using these services to send money to other countries would also shoulder the increased cost [1]. Additionally, the proposal would require Americans to disclose personal information to financial institutions and the Internal Revenue Service to avoid paying the tax, which industry groups contend would impose an undue burden on everyday Americans [2].

The U.S. is the primary source of remittances, with the top recipient countries being India, Mexico, and China. The proposed tax could significantly impact these flows, which often support families and communities in recipient countries [3]. The tax is expected to affect nearly 50 million people, including green card holders and non-immigrant visa holders, as well as unauthorized immigrants. Naturalized citizens would be exempt from the tax [3].

MoneyGram CEO Anthony Soohoo expressed concern about the tax, noting that sending such payments is often a necessity for consumers. PayPal, Remitly, and Wise, all of which have representatives on the Financial Technology Association’s board, did not immediately respond to requests for comment [1].

The tax was initially proposed as a 5% levy but was reduced to a 3.5% tax proposal following a last-minute amendment before the vote. The proposal is part of a broader scheme of measures from the U.S. government targeting immigrants [3].

References:
[1] https://www.paymentsdive.com/news/budget-bill-remittance-tax-fintech-pushback/749271/
[2] https://www.cnbc.com/2025/05/29/house-republican-budget-bill-pass-through-tax-business-deduction.html
[3] https://www.fxcintel.com/research/reports/ct-us-remittance-tax-impact