United States – Hawaii

Licensing, Authorisation & Market Access

Hawaii regulates payments and money-transmission activity through a single state-level nonbank licensing perimeter: the Money Transmitters Modernization Act, codified at HRS Chapter 489D and administered by the Division of Financial Institutions (DFI), part of the Department of Commerce and Consumer Affairs. Money transmission activity in Hawaii requires a state license under this framework, and licensees are additionally subject to NMLS registration; there is no separate electronic-money or prepaid-instrument (EMI/PPI) licensing category, meaning nonbank payments providers of every stripe -- from remittance firms to bill-payment processors -- fall under the same statutory umbrella as traditional money transmitters.

Conduct, Safeguarding & Promotions

HRS 489D-7 and 489D-8 impose Hawaii's core safeguarding mechanism for nonbank money transmitters: licensees must maintain a bond or other security device and hold permissible investments matched to outstanding payment-instrument obligations. The commissioner may waive certain requirements where posted security already exceeds outstanding volume, and a letter of credit is acceptable as substitute security -- a flexible, principles-based safeguarding regime rather than a prescriptive trust-account mandate. This bond-and-permissible-investments structure is the core customer-fund-protection mechanism for Hawaii's nonbank payments sector, layered underneath the general conduct obligations imposed by HRS Chapter 480's Unfair or Deceptive Acts or Practices statute.

Stablecoins & Digital Money

The Digital Currency Innovation Lab (DCIL), Hawaii's four-year fintech sandbox, concluded on June 30, 2024. DFI determined that digital-currency company activities do not align with the HRS 489D money-transmission definition, resulting in no license requirement for digital-currency activity effective July 1, 2024 -- a four-year sandbox concluded with a negative-carve-out outcome rather than a new licensing track.

Operational Resilience & Critical Infrastructure

Hawaii lacks a DORA-style ICT and critical-third-party resilience regime. Operational resilience for licensed financial institutions instead runs through DFI's examination and enforcement rules under Hawaii Administrative Rules Chapters 26-27, alongside the state's general security-breach notification statute, HRS Chapter 487N, under which federally-compliant financial institutions are deemed compliant.

Outlook

No dedicated operational-resilience or critical-third-party oversight regime is signaled for Hawaii; the jurisdiction is likely to continue relying on general examination rules and breach-notification law, with any future shift more likely to originate at the federal level than the state level.

Scheme & Network Compliance

Hawaii has no state-level interchange-fee cap or surcharge-limit statute. Two legislative attempts to ban credit-card surcharging, in 2013 and 2014, failed to pass the legislature, leaving Visa and Mastercard scheme rules to govern surcharge caps and disclosure by default.

Outlook

With no live legislative vehicle identified, scheme rules are expected to remain the default governing mechanism for surcharge caps and disclosure in Hawaii for the foreseeable future.

Payment Corridor Dynamics

Hawaii's principal outbound remittance corridor runs to the Philippines, reflecting the state's large Filipino community, served by licensed money-transfer operators such as BayaniPay, an agent of BDO Remit USA. Pacific corridor costs remain among the highest globally, and correspondent-banking de-risking is increasingly constraining settlement access for these high-volume Pacific and Philippines remittance flows.

Industry Structure & Commercial Dynamics

Hope Bancorp completed its approximately $78.6 million all-stock acquisition of Honolulu-based Territorial Bancorp, parent of Territorial Savings Bank (roughly $2.17 billion in assets, 28 branches), on April 2, 2025, after Territorial shareholders rebuffed a competing bid -- a deal that reshapes Hawaii's thrift tier.

First Hawaiian Bank remains Hawaii's largest financial institution, with total assets of nearly $25 billion and branches spanning Hawaii, Guam and Saipan; the bank has adopted third-party digital-banking and lending platforms to modernize its commercial and payments operations.

Legal & Litigation

DFI's formal enforcement toolkit under HRS 489D-24 through 489D-29 includes license suspension or revocation, cease-and-desist orders, consent orders, civil penalties, and criminal penalties, with false statements constituting a class C felony. Separately, Ninth Circuit case law under HRS 480-2 and 480-13 has addressed credit-card-provider unfair-or-deceptive-practices claims, holding they are not preempted by the National Bank Act and do not require individual reliance proof for class certification.

Merchant Acquiring & Risk

Hawaii has no bespoke merchant-acquiring license or high-risk-MCC statute; acquiring activity is governed instead by card-network rules and the general HRS 480 unfair-or-deceptive-practices framework for merchant-consumer disputes, alongside favorable general-excise-tax treatment of merchant-discount income earned by financial institutions.

Outlook

Absent new legislation, merchant acquiring in Hawaii will continue to be governed by card-network rules and general consumer-protection law rather than a bespoke state regime.

Product Innovation & Market Development

Hawaii Technology Development Corporation's HI-CAP program deployed $62 million in federal funding secured in 2022 to expand capital access for Hawaii small businesses, startups, and entrepreneurs, including fintech-adjacent ventures, alongside the now-concluded Digital Currency Innovation Lab sandbox that ran from 2020 to 2024.

Outlook

With the DCIL sandbox concluded, HI-CAP and bank/credit-union fintech partnerships are likely to remain Hawaii's principal innovation vehicles; no Hawaii-specific FedNow overlay or CBDC pilot is signaled for the coming period.

Consumer Protection & APP Fraud

Consumer protection for Hawaii payments users runs through the general HRS Chapter 480 unfair-or-deceptive-practices framework, enforced by the Office of Consumer Protection, with treble-damages and attorney-fee remedies available to injured consumers; there is no Hawaii-specific authorized-push-payment fraud mandatory-reimbursement scheme.

FBI Honolulu-cited IC3 data show Hawaii elder-fraud losses nearly tripling from about $10 million to $28 million over the preceding three years, prompting credit-union-hosted public-education programming.

AML/CFT & Financial Crime

This module's intelligence is sourced from the Sentinel.gi feed rather than original WPM illicit-finance analysis. HRS 489D-16 requires every Hawaii money-transmitter licensee and its authorized delegates to file reports relating to transactions in the State as required by federal recordkeeping and reporting requirements under Title 31 U.S.C. section 5311 et seq. and 31 CFR Part 103, wiring the state licensing regime directly into the federal BSA/AML reporting perimeter.

Correspondent Banking, Settlement & Access

The central analytical divide in this module is between bank correspondent access and non-bank settlement dependency: Bank of Hawaii Corporation functions as a key U.S. correspondent and settlement node for Guam and other Pacific Islands, a role available to it as a regulated bank that non-bank payment providers serving the same corridors cannot replicate. The company's own regulatory risk factors note that regulators weigh AML-program effectiveness when reviewing bank mergers and bank-holding-company acquisitions, tying correspondent access directly to compliance posture.

Commercial Intelligence (M&A, Investment & Product)

Bank of Hope, parent of Hawaii's Territorial Savings unit, announced an agreement to purchase SMBC's Americas commercial banking division, comprising approximately $2.5 billion in commercial and CRE loans and $2.7 billion in deposits on a net-book-value basis; terms were not publicly disclosed. The deal is expected to close in the second half of 2026 and to be approximately 20% EPS-accretive by 2027. This is distinct from the earlier Hope Bancorp acquisition of Territorial Bancorp, which closed just outside this baseline's trailing-12-month collection window and is instead carried as industry-structure context under W6.