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.