Transaction Trends

PJ Hoffman

Much attention is paid to the national political headlines and ETA’s efforts on federal government issues, but over the last few months state legislatures and regulatory agencies have been extremely busy. Don’t worry…ETA has been following the action and has a hand on the pulse of what is happening across the country is statehouses coast to coast.

Here are some of the issues we have been following:

New York Cybersecurity

Summary: The New York Department of Financial Services proposed Cybersecurity Rules for Financial Services Companies and their third party service providers.

ETA Position: ETA submitted a comment letter on January 27, 2017. ETA supports a flexible national standard for cybersecurity. A patchwork of state laws undermines the effectiveness of cybersecurity programs.

Remittance Tax/Fee Bills

Summary: Georgia (H66), Texas (H1760), Oklahoma (SB547), Iowa (HSB150), and West Virginia (SB179) have introduced similar bills that would provide for new taxes or fees to be levied on users of money transmission services or remittances. Two more state legislative bodies (Oregon and Virgin Islands) are considering offering similar bills.

ETA Position: ETA has sent letters of opposition to the Georgia and Oklahoma state legislatures. ETA is keeping an eye on Texas, Iowan, and West Virginia and will respond as these bills move forward.

Maryland Processor / Merchants Bill

Summary: Maryland bill (MD HB 1400) has been introduced and would place limitation on card processor agreements with merchants. The bill covers financial institutions and ISOs. The main provisions are:

• The prohibition on agreements authorizing liquidated damages for the termination of the agreement;
• A prohibition on early termination fees over $99;
• Upon receipt of notice of a termination the processor cannot debit/access the merchant bank account after 60 days from receipt of written termination notice;
• Monetary violations.

This is a problem as it would be in conflict with the card rules who need longer time for chargebacks and returns.

ETA Position: ETA is tracking this issue closely and is working with member companies to respond to this issue. A hearing has been scheduled on March 10, 2017.

Massachusetts Third Party Payment Processor Bill

Summary: The Massachusetts Governor’s Budget (MA Budget Bill – HF 1) includes a provision dealing with sales tax collection to do two things.

• It would enable the Dept. of Revenue to implement new criteria for 1099-K notifications, allowing the Commissioner discretion to require reporting using criteria that may not match the federal criteria.
• Requires Third Party Payment Processors to remit to Massachusetts, on a daily basis, the portion of a sale that attributable to sales tax, provided that the transaction involves a vendor or operator that employs 50 or more people.

ETA Position: ETA has long opposes this approach as it would create headaches and would require new reconciliation and reporting structure for folks doing business in MA. It would require the construction of the non-existent system regarding direct payment of sales tax by TPP to the state. ETA is working with member companies to fight this bill.

If you are interested in learning more about any of these issues or have other state issues that you think ETA should follow, please reach out to me at [email protected]. To sign up for ETA’s State Issues Committee to stay informed on these important issues, you can sign up here.

PJ Hoffman is Director of Regulatory Affairs at ETA.