BILL ANALYSIS



C.S.H.B. 1299
By: Carona
03-03-95
Committee Report (Substituted)


BACKGROUND

The increased availability of ATM terminals is due to the existence
of shared networks or systems which are comprised of terminals
owned and operated by various owners and financial institutions. 
These networks exist on a regional basis (such as the Pulse system
which operates within the State of Texas) and on a national and
international basis (such as the Cirrus and Plus systems). 
Agreements exist between the networks, the terminal owners, and the
financial institutions which issue the access cards to customers. 
These sharing agreements provide for various fees to be charged by
and between the parties for the use of the network or system.  A
financial institution will often charge its customer a transaction
fee (usually $.50 or $1.00) for the use of a machine not owned by
the financial institution in order to recoup its costs associated
with the transaction.    

Currently, there is no contractual or legal prohibition for a
terminal owner to charge such a fee to a customer whose financial
institution is a member of a regional network such as the Pulse
system.  Accordingly, customers who use access cards issued by
Texas financial institutions on electronic terminals located in
this State may pay a transaction fee.  However, the national shared
networks (Cirrus and Plus systems) prohibit owners of terminals
from charging transaction fees unless applicable state law
specifically allows such charges.  Consequently, transactions using
a regional network are subject to the transaction fee while
transactions using the Cirrus and Plus systems are not.  Therefore,
a consumer holding a card issued by a Texas financial institution
may be charged a transaction fee for using a terminal located in
Texas, while a consumer holding a card issued by a New York
financial institution will not be charged the transaction fee.

Several states have reacted to this situation by expressly
authorizing owners of terminals to charge reasonable transaction
fees for the use of the terminals, regardless of the shared network
or system.  Those states currently include: Nevada (1990), Maine
(1992), Utah (1992), Idaho (1993), Georgia (1993), Louisiana
(1993), Alabama (1994), and Mississippi (1994).  H.B. 1299 is very
similar to legislation enacted in those states.  

PURPOSE

HB 1299 would expressly authorize owners of electronic terminals to
charge reasonable transaction fees, regardless of the network or
system to which the customer's financial institution belongs.  

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title 16 of the Texas Banking Code (art. 342-101,
et seq., Vernon's Texas Civil Statutes) to add a new article
342-903d to authorize owners of electronic terminals located in
this State (which include point-of-sale terminals, unmanned teller
machines, and cash dispensing machines) to charge customers a fee
for the use of those terminals when they are connected to a shared
network or system.   Agreements relating to the use and operation
of such shared networks or systems shall not prohibit owners of
electronic terminals from charging such fees.

SECTION 2. Effective date:  September 1, 1995.

SECTION 3. Emergency clause.


COMPARISON OF ORIGINAL TO SUBSTITUTE

There are no substantive differences between the original and the
substitute.  The substitute is a council draft of the original bill
with council language.

SUMMARY OF COMMITTEE ACTION

The committee convened in a public hearing on March 6, 1995 to
consider HB 1299.  The Chair laid out HB 1299 and recognized Rep.
Carona to explain the bill.  The Chair offered a complete committee
substitute for the bill which was adopted without objection.  

The following people testified in favor of the bill:  
William Deckelman
Stan Paur
Christopher Williston
Thomas Rouse
John Heasley.

The motion to report HB 1299 favorably as substituted with the
recommendation that it do pass and be printed prevailed by the
following record vote:  7 Ayes, 0 Nays, 0 PNV, 2 Absent.