Transaction Trends

PJ Hoffman

One of the best parts of my job here at ETA is being an advocate on behalf of our great members. On March 10, 2017, I was in Annapolis, Maryland to represent ETA and the payments industry at a legislative hearing of the Maryland House Economic Matters Committee. ETA was part of a panel who testified in opposition to H.B. 1400.

Summary of H.B. 1400

H.B. 1400, if passed, would restrict service agreements between credit card processors and a merchant including capping early termination fees at $99.00, limiting access to a merchant’s bank account after 60 days of a written notice or termination, and prohibiting an authorization of liquidated damages.

ETA Testifies

ETA regularly testifies before Congress and state legislative hearings and submits comment letters for issues that affect the payments industry. This issue is no exception. ETA has concerns about the devastating effects that H.B. 1400 would have on payment processors, small businesses, and Maryland consumers.  On Friday, March 10, 2017, ETA was able to convey those concerns to members of the Maryland House Economic Matters Committee. In addition, ETA submitted a letter to the members of the Committee detailing additional unintended consequences that the bill includes. A copy can be found here. [LINK TO LETTER]

At the hearing, ETA testified regarding the following concerns:

1. A cap on early termination fees would not allow merchant service providers to recoup significant upfront onboarding costs and costs for ceasing payment services for merchants. These types of contracts are business to business contracts that are customized based on the type, size, and mode of business and the state should not arbitrarily set caps on fees negotiated by sophisticated parties.
2. The consequences to limiting merchant bank account access would ultimately generate multiple obstacles for Maryland merchants looking to contract with processors to secure electronic payment services. These hurdles could lead to reduced access to the payments system, increased reserve requirements, and limitations on contract negotiations for Maryland merchants.
3. Prohibition of liquidation of damages will ultimately lead to reduced access to electronic payments and increased cost for services for small businesses in Maryland.
4. The negative impacts would trickle down to consumers through decreased access to electronic payments and potentially passing down of costs. If small merchants, in particular, are shut out of the electronic payments system, consumers will have fewer payment options and small businesses may suffer with ultimately fewer customers and smaller transaction amounts.

ETA Has You Covered

While this hearing was a successful example of advocacy on behalf of our members, ETA will remain vigilant on the many state and national issues that affect the payments industry. If you have any states or national issues that you think ETA should be weighing in on, please let us know by emailing ETA

PJ Hoffman is Director of Regulatory Affairs at ETA. He can be reached at [email protected].