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KEEP CREDIT CARD CHAOS OUT OF TEXAS

Mega-stores in Texas are pushing two new mandates that, taken together, would completely upend the way your credit and debit cards work — eliminating guaranteed acceptance of credit cards, forcing higher costs and lost revenues for small businesses, and frustrating consumers who could be made to carry cash for their purchases.

While different, both bills cause significant chaos in the payments system:

  • HB 4061/SB 2056 would require every single business in Texas to individually negotiate a credit card processing deal with 280 banks around the world – a radical change from the system in place today that allows businesses to accept all cards with a single agreement. This shift could impact an estimated $1.2B IN CONSUMER SPENDING EVERY DAY.

  • Under SB2026/HB4124, consumers would have to pay for sales tax and tips with cash or check. The bill would require small business owners to invest thousands of dollars in upgraded technology with. At the same time, the bill could diminish income for tipped workers if diners are unable to tip with credit and debit cards.

 

The result? The largest corporate retailers would rake in tens of millions, while consumers and local Texas businesses pay the price.

The top 10 mega-stores — which include the likes of Walmart, Amazon, Albertsons, Target and Home Depot — would increase their profits by $6.4 million, while burdening the 3.2 million small businesses in Texas to upgrade their payment systems to comply with the law. In addition, consumers may end up seeing hassles at check-out if their cards are no longer accepted or they have to pay tip and sales tax in cash.

And if a legal ruling in Illinois holds, a law like this in Texas might only apply to local banks and credit unions — not the national banks — putting our local banks at a disadvantage vs. their national competitors.

Taken together, these bills lead to massive amounts of red tape for the 3.2M small business owners that are the lifeblood of the Texas economy. Don’t let corporate mega-stores pull a fast one on Texan shoppers, businesses, and local financial institutions.

Take Action

Texas cannot afford the credit card chaos SB 2026/HB 4124 and HB 4061/SB 2056 will cause. Small businesses cannot afford the new costs, cardholders will not tolerate the loss of guaranteed card acceptance, convenience and privacy these new changes will bring, and community banks and local credit unions’ ability to provide critical benefits and services to their members, like access to free- and low-credit banking, will vanish – just so corporate mega-stores and nationwide convenience chains can pocket more money. The current credit and debit card processing system works and provides a valuable service by facilitating efficient purchases, universal acceptance, and state-of-the-art protections against fraud and personal identity theft.

Contact Your Lawmakers Today

Avoid Credit Card Chaos

The Texas Credit Card Chaos bills would bring about credit card chaos for consumers, small businesses, community banks, and local credit unions – here’s why:

If HB 4061/SB 2056 were to be enacted, the impact to the Texas economy could be severe. Millions of card holders could see their credit cards declined if their store of choice does not have an agreement in place with their card issuer.
The impact to the local economy will be devastating. An estimated 12.7 million daily credit card transactions in Texas could be impacted by this bill, representing more than $1.2 billion of consumer spending that could be disrupted every day when cards are declined at checkout.
Private information about what consumers are purchasing will be required to be shared, eliminating the privacy protections that exist today.
Under SB 2026/HB 4124, consumers could be forced to pay sales tax in cash or check. Purchases will require two transactions – one for the goods or services and another for taxes and tip. As retailers look to eliminate the hassle of multiple transactions or filing for monthly refunds, some may be forced to require that tax be paid in cash. Customers who have grown accustomed to shopping with only their phone or a single card will also need to start carrying cash.
Smaller merchants will bear the cost burden of complying with new laws, whether through new technology to separate or itemize transactions or time spent every month gathering paperwork to request a refund for interchange. This requires time most small businesses don’t have and is prohibitively complex for retailers selling products with varying tax rates.
Vendors selling online could decide that doing business in the state is not worth the hassle and expense of complying with this radical change to commerce.
Tipped workers would see their livelihoods negatively impacted when consumers are required to tip in cash, a particularly problematic scenario for gig workers who rely on electronic tips as part of their wages.

Resources

OPINION: Small Businesses Are the Heart of Our Community — Changing How Credit Cards Work Makes it Harder for Us to Survive

OPINION: Texas Should Say "I Don't" to Flawed Proposal to Overhaul Credit Card System

New Texas Law Would Create Windfall for Corporate Giants

Restaurant operator on Texas bill threatening point-of-sale systems: They ‘fail to consider the realities of running a small business’

Our Local Texas Partners

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