On February 27, Texas State Senator José Menéndez (D) introduced Senate Bill 1736, a piece of legislation aimed at regulating convenience fees associated with electronic payments for motor vehicles. SB 1736 would allow such fees to be imposed to offset electronic payment processing costs as long as certain restrictions are met and disclosures are made.
Key Provisions of SB 1736
- Definition of Electronic Payment: The bill defines “electronic payment” to include payments made by credit card, debit card, electronic funds transfer, electronic check, or any other electronic method. This broad definition aims to ensure that all forms of digital transactions are covered under the proposed legislation.
- Conditions for Imposing a Convenience Fee: The bill allows holders of retail installment contracts, or their agents, to collect a convenience fee for processing electronic payments, provided certain conditions are met:
- Reasonable Relation to Processing Expense: The fee must be reasonably related to the actual expense incurred in processing the electronic payment.
- Fee Cap: The fee cannot exceed the lesser of $10 or 5% of the payment amount.
- Alternative Payment Methods: The holder or agent must offer an alternative payment method that does not incur a fee, such as payment by check, cash, or money order.
- Disclosure Requirements: Before the consumer agrees to make an electronic payment, the holder or agent must inform the consumer of:
- The amount of the fee.
- The availability of alternative payment methods that do not incur a fee.
- The fact that electronic payment is not the expected form of payment.
If passed, SB 1736 will take effect on September 1, 2025. However, there is certainly no guarantee that SB 1736 will become law.
