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.