03/18/2019 03:15 PM House LABOR & COMMERCE

             HB 44-AUTOMATED TELLER MACHINES: FEES                                                                          
                                                                                                                                
4:11:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced that the  final order of business would                                                               
be  HOUSE BILL  NO. 44,  "An Act  relating to  fees for  using an                                                               
automated teller machine; and providing for an effective date."                                                                 
                                                                                                                                
4:12:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DAN ORTIZ,  Alaska  State  Legislature, as  prime                                                               
sponsor, presented  HB 44.   He paraphrased parts of  the sponsor                                                               
statement [included in  the committee packet], which  read in its                                                               
entirety as follows [original punctuation provided]:                                                                            
                                                                                                                                
      The intent of this bill is to allow retail automatic                                                                      
       teller machines (ATMs) to charge a withdraw fee on                                                                       
     transactions made by international bank card holders.                                                                      
                                                                                                                                
     Currently,  independently owned  ATMs are  not able  to                                                                    
     charge  a fee  on  transactions  made by  international                                                                    
     card  holders. Our  current law  only pertains  to ATMs                                                                    
     owned by  state-sponsored banks  or credit  unions, and                                                                    
     does not  include retail  and individually  owned ATMs.                                                                    
     Because  of  this  gap, retail  ATMs  cannot  charge  a                                                                    
     withdraw fee  on transactions  from bank  cards outside                                                                    
     of the United States.                                                                                                      
                                                                                                                                
     Alaska welcomes millions of visitors  each year, with a                                                                    
     large  percentage of  those visitors  from  out of  the                                                                    
     country. In  the summer of  2016 alone,  nearly 300,000                                                                    
     international  visitors  came  to  Alaska.  Retail  ATM                                                                    
     owners   cannot   charge   fees  on   these   tourists'                                                                    
     transactions.                                                                                                              
                                                                                                                                
     Multiple  other states   have  already  passed laws  to                                                                    
     close this gap and allow  retail ATM owners to charge a                                                                    
     transaction fee to international card holders.                                                                             
                                                                                                                                
4:14:11 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked  if domestic card holders can  be charged a                                                               
withdraw fee.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  ORTIZ  answered  yes.    He  explained  that  the                                                               
current  bill would  "close the  gap" and  allow privately  owned                                                               
ATMs  to  charge international  users  [a  withdraw fee],  adding                                                               
that, currently,  retail ATM owners charge  domestic card holders                                                               
more  to  make   up  for  the  rates  they   don't  receive  from                                                               
international  users.   He  stated that  the  current bill  would                                                               
allow  private  owners  to  set  a  fee  for  withdraws  made  by                                                               
international  card users,  which  would  increase their  revenue                                                               
from international  tourists.   He further noted  that HB  44 has                                                               
received  support from  Alaskan ATM  owners; the  Alaska Cabaret,                                                               
Hotel,  Restaurant  and  Retailers Association  (CHARR)  and  the                                                               
National ATM Council, Inc. (NAC).                                                                                               
                                                                                                                                
4:15:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STUTES  inquired as  to the difference  between an                                                               
international user and a "regular" user.                                                                                        
                                                                                                                                
REPRESENTATIVE  ORTIZ explained  that an  international user  was                                                               
"anyone from a foreign country other than the United States."                                                                   
                                                                                                                                
REPRESENTATIVE STUTES  surmised that an international  user would                                                               
be recognized  by his or  her bank  being located outside  of the                                                               
United States.  She asked if this was correct.                                                                                  
                                                                                                                                
4:16:33 PM                                                                                                                    
                                                                                                                                
CAROLINE  HAMP, Staff,  Representative  Dan  Ortiz, Alaska  State                                                               
Legislature, on behalf of Representative  Ortiz, prime sponsor of                                                               
HB  44, acknowledged  that it  was  the card  holders' bank,  not                                                               
their nationality, that was significant.                                                                                        
                                                                                                                                
4:16:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN said  she had made the  presumption that if                                                               
an ATM  couldn't charge a fee  then the bank card  wouldn't work,                                                               
when, in reality,  an international card holder can  use the ATM,                                                               
but no fee is recovered.                                                                                                        
                                                                                                                                
REPRESENTATIVE ORTIZ said that was correct.                                                                                     
                                                                                                                                
REPRESENTATIVE HANNAN asked  if ATM owners were  allowed to block                                                               
users if they couldn't charge them a fee.                                                                                       
                                                                                                                                
REPRESENTATIVE ORTIZ replied  that he did not know  the answer to                                                               
that question.                                                                                                                  
                                                                                                                                
4:17:52 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL, as  an ATM owner himself, disclosed  a conflict of                                                               
interest.   In  response to  Representative Hannan,  he explained                                                               
that  he bought  his [ATM]  machine  from a  private company  who                                                               
processes the transactions and compensates  him monthly.  He said                                                               
he was unsure  as to whether that company  can block transactions                                                               
from  specific  banks,  adding that  foreign  card  holders  most                                                               
likely use  the machine without  being charged the  withdraw fee.                                                               
Nonetheless,  he  revealed that  even  if  they  had to  pay  the                                                               
withdraw fee  and he was  making money off every  transaction, he                                                               
still wouldn't  be inclined to  lower the  fee.  He  concluded by                                                               
expressing his support for the current bill.                                                                                    
                                                                                                                                
REPRESENTATIVE STUTES  sought clarification  on the  withdraw fee                                                               
and whether  it concerned the exchange  rate or if it  was simply                                                               
the  extra fee  a card  holder is  charged when  they use  an ATM                                                               
machine that does not belong to their bank.                                                                                     
                                                                                                                                
REPRESENTATIVE ORTIZ confirmed that it was the extra fee.                                                                       
                                                                                                                                
4:20:53 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX recognized Bruce Renard  and asked him if private                                                               
ATM machine owners can block foreign transactions.                                                                              
                                                                                                                                
BRUCE  RENARD, Executive  Director,  National  ATM Council,  Inc.                                                               
(NAC), pointed  out that it's  a misnomer to  refer to an  ATM as                                                               
"private" because each  one has a sponsoring bank.   He explained                                                               
that  60 percent  of  ATMs  in the  United  States  are owned  by                                                               
entrepreneurs   and   business   owners  and   referred   to   as                                                               
"independent  ATMs," despite  being  operated  pursuant to  their                                                               
sponsoring bank.                                                                                                                
                                                                                                                                
CO-CHAIR  LEDOUX  interjected,  asking  Mr. Renard  if  he  could                                                               
answer  her previously  stated  question and  save  the rest  for                                                               
public testimony.                                                                                                               
                                                                                                                                
MR. RENARD  consented and offered  his belief  that, technically,                                                               
blocking [foreign  transactions] could be  done, but it  would be                                                               
in violation  of the network rules.   He explained that  all ATMs                                                               
are subject  to compliance with  the rules of the  global finance                                                               
network, who wouldn't approve of  blocking.  He further described                                                               
the  situation [in  Alaska]  as "a  catch-22"  because ATMs  must                                                               
allow  these  international   transactions  that,  theoretically,                                                               
could be  blocked.  He noted  that Alaska is the  last state with                                                               
this glitch.                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX inquired  as to  why her  Wells Fargo  bank card                                                               
only   works   in  certain   ATM   machines   when  she   travels                                                               
internationally.                                                                                                                
                                                                                                                                
MR.  RENARD  stated  that   different  countries  have  different                                                               
protocols,  however,  Visa  and   Mastercard  cards  should  work                                                               
everywhere,  which is  why they  are  so dominant.   He  remarked                                                               
that,  in general,  ATMs should  accept US  cards abroad,  and if                                                               
they don't it's unique to that country.                                                                                         
                                                                                                                                
4:24:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN  stated that  she intended to  support this                                                               
piece   of   legislation   because  Alaska   receives   so   many                                                               
international visitors.   She asked if a statute  had been passed                                                               
to  allow  ATMs   to  charge  fees  on   domestic  card  holders'                                                               
transactions.    She  sought  clarification  as  to  why,  in  an                                                               
industry  that is  highly regulated  by  the federal  government,                                                               
Alaska   was  the   last  state   with  this   glitch  concerning                                                               
transaction fees.  She asked  if international fees were excluded                                                               
from federal banking law.                                                                                                       
                                                                                                                                
REPRESENTATIVE   ORTIZ  offered   his  understanding   that  when                                                               
regulations   around  ATM   use  were   established,  they   left                                                               
independently owned machines  out of the equation.   He explained                                                               
that, currently, institutions like Wells  Fargo can charge a fee,                                                               
but  for  some  reason,  Alaska   remains  the  one  place  where                                                               
individually owned  ATMs cannot  charge international users.   He                                                               
added that passing the current bill  would put Alaska on par with                                                               
the other 49 states.                                                                                                            
                                                                                                                                
4:26:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX opened public testimony.                                                                                        
                                                                                                                                
4:27:21 PM                                                                                                                    
                                                                                                                                
MR. RENARD addressed the intent of  the current bill, which is to                                                               
solve the glitch  that is specific to Alaska  and its interaction                                                               
with the global network rules.   That interaction has resulted in                                                               
the inability  of Alaska's independently  owned ATMs to  charge a                                                               
reasonable fee  on transactions made  by international  bank card                                                               
holders.    He  pointed  out   that  federal  law  placed  a  fee                                                               
disclosure  requirement  and  the  ability  to  opt  out  on  any                                                               
surcharge  established  by ATM  owners.    This has  resulted  in                                                               
independently  owned  ATM  surcharges  remaining  low,  generally                                                               
within two  to three dollars,  whereas surcharges from  Bank ATMs                                                               
(other than one's own) may be  twice as high.  He reiterated that                                                               
HB 44  would fix the  glitch that is  currently in Alaska  law by                                                               
allowing  ATMs to  charge  the same  fees  to international  card                                                               
holders as they do domestic card  holders.  By doing so, he said,                                                               
it would  create a  level playing field  between bank  owned ATMs                                                               
and independently owned ATMs.                                                                                                   
                                                                                                                                
4:33:07 PM                                                                                                                    
                                                                                                                                
PAUL THOMAS, Owner, Alaska Cache  Liquor Inc, noted that he owned                                                               
the ATM located  inside his business as well as  14 other ATMs in                                                               
Juneau.  He stated that  the current bill would put independently                                                               
owned ATMs on  par with all the  other ATMs.  He  pointed out the                                                               
impact  that  being  located   close  to  international  traveler                                                               
departure  points has  on  ATM  operators.   The  docks, being  a                                                               
prominent   departure  point   for   international  cruise   ship                                                               
passengers,  means  independent ATMS  in  that  area will  see  a                                                               
considerable  amount  of "no  charge"  fees,  which could  prompt                                                               
owners to  raise the surcharge.   He  urged members to  even "the                                                               
playing field."                                                                                                                 
                                                                                                                                
4:34:07 PM                                                                                                                    
                                                                                                                                
SARAH  OATES, President/CEO,  Alaska  Cabaret, Hotel,  Restaurant                                                               
and   Retailers  Association   (CHARR),   noted   that  she   was                                                               
representing many business owners from  across the state, many of                                                               
whom  have  independent  ATMs  in   their  establishments.    She                                                               
expressed their support  for the current bill, as  it would allow                                                               
for  independent ATM  owners to  collect  the same  fee as  large                                                               
financial institutions.   She stated that current  law puts small                                                               
business owners  at a  disadvantage by forcing  them to  "eat the                                                               
cost"  of  international fees  rather  than  passing them  on  to                                                               
consumers.  She concluded by  reiterating that Alaska CHARR fully                                                               
supports "this  very fair  piece of  legislation that  would help                                                               
small Alaskan businesses."                                                                                                      
                                                                                                                                
4:35:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX closed public testimony  and announced that HB 44                                                               
was held over.