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Smaller Texas Banks Stand to Gain from Ban on Debit Surcharge

U.S. Navy/LaTunya Howard

This year the Texas Legislature passed HB 3068, banning the surcharge placed on debit cards. The bill was championedby The Independent Bankers Association of Texas (IBAT), an organization that provides resources to the state’s smaller, community banks.

IBAT Executive Vice President Stephen Scurrlock says the law will have a positive impact on Texas’ small businesses – and that by scuttling the additional cost of using a card not affiliated with a giant bank, payment by debit card will no longer discriminate against community banks. 

Scurrlock adds that the prohibition on debit card surcharges prevents large stores from forming agreements with what he calls the “mega-banks” that distribute credit and debit cards, like Visa and Master Card.

Smaller banks are characterized as having $10 million to $20 billion in assets, but are the source of about 40 percent of all loans, according to IBAT.

“[Community banks] are an important role in the economic infrastructure,” Scurrlock explains. “Their success is tied to the success of the community.”

HB 3068 mirrors a ban on credit card surcharge passed in 1985, which Scurrlock sees as a reflection of the growing popularity of the debit card. The ban will take effect the first of September.

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