TX HB 1196

Key Points in Opposition

• We respectfully request opposition to HB 1196.
• HB 1196, in its current form, would mandate burdensome requirements and institute price controls that could shut down employer payroll card programs currently offered by banks in the State of Texas.
• The legislation and bill analysis imply that all of the benefits and cost savings inherent in the utilization of a payroll card program accrue to the employer. While it is true that there are benefits and cost savings for the employer, there are also substantial benefits and cost savings for employees, especially those employees without a bank account who may be using check cashing services and paying fees up to 15% of the face value of their check. In addition, employees benefit from the safety, security, and convenience features of a payroll card.
• Banks do not promote payroll cards as the sole means for employers to transmit compensation to employees. Instead, banks promote payroll cards as a voluntary, beneficial option for employers and for employees who may not have an existing bank account and who elect to receive wages via direct deposit.
• While there are many free services available to the user of a payroll card, there are some fees associated with certain repeat uses. However, the payroll card program, including associated benefits and fees, is fully disclosed, in writing, to each employee before they choose to enroll in the program.
• The definitions used in HB 1196 imply a misunderstanding of payroll card programs, how they work, and the contractual relationships involved.
• Several sections of HB 1196 (61.153, 155, 156, and160) are either in conflict with, inconsistent with, or duplicate existing federal regulations that govern the operations and disclosure requirements of payroll card programs. Banks already comply with Federal Reserve Regulation E and Regulation P, which govern various aspects of bank products and services, including payroll card programs.
• If Section 61.158 prevails, banks may decide not to offer payroll card programs in the State of Texas. The provisions could require the bank offering the program to operate at a loss. The payroll card program is a voluntary program; therefore, the State should not mandate how the program is offered and what fees are permissible.
• In addition, the bank does not control what documents the employer provides to its employees or in which languages such documents are provided. While we do make Spanish language documents available as requested, we would not be able to comply with Section 61.158, as it would require the bank to provide the cardholder agreement in any language in which the employer may provide other documents, such as the written consent form.