SB 1596

84(R) - 2015
Senate Business & Commerce
Senate Business & Commerce
Business, Industry, & Commerce

Companion Bill

HB 1881

Vote Recommendation

Vote Yes; Amend
  • Positive
  • Neutral
  • Neutral
  • Positive
  • Neutral


Brandon Creighton

Bill Caption

Relating to authorizing certain private schools to charge fees for processing or handling certain payments or payment transactions.

Fiscal Notes

No fiscal implication to the State or units of local government is anticipated.

Bill Analysis

SB 1596 would allow a private school to place a reasonable and necessary surcharge to recover the transaction costs of processing a payment made by debit or credit card. This bill would also allow a reasonable charge in connection with a payment transaction refused for insufficient funds. However, the school must notify the person making the payment of any fee to be charged.

Vote Recommendation Notes

Businesses that accept credit and debit cards are charged a fee by the companies that process the charges when the card is swiped. The charge for those fees is usually 3% of the transaction. Some businesses would like to pass that charge on to the consumers by adding a surcharge on to purchases made using debit or credit cards. Cash customers would not have to pay the surcharge. 

Currently, under Section 59.402 and 339.001 of the Finance Code, an imposition of a surcharge for use of a credit card or debit card is not allowed unless it is by a governmental authority. That includes public schools and institutions of higher education. However, their private sector competitors do not have the benefit of being able to pass along the transaction fee to the customer. This creates an artificial competitive advantage for government schools. 

This bill would amend the current statute to allow private schools to levy a transaction fee surcharge just as public schools already do.

If the private school competitors could not already levy a surcharge, this bill would create a special privilege for one type of business which we would oppose. However, because their competitors already have the benefit of passing the transaction fee on to customers, it is within the proper role of government to remove the prohibition from private schools. We support SB 1596.

Ultimately, preventing businesses from recovering their transaction costs by surcharge is a big government regulation that should be done away with entirely. While legislators are considering the SB 1596, they may want to take a further step by amending the bill to do away with the surcharge prohibition altogether. 

Organizations Supporting

Texas Catholic Conference of Bishops