A law that takes effect in January will allow Texas merchants to ask for photo identification for credit and debit card purchases – and turn down transactions if a buyer won’t show it.
The aim of the law — which the Legislature passed during the regular session that ended in May — is to reduce debit and credit card fraud. Though merchants will sometimes pick up the tab for money lost to fraud, it often falls to banks to absorb the losses and replace compromised cards.
“We end up taking a lot of losses,” said Kevin Monk, executive vice president and chief operations officer at Alliance Bank, based in Sulphur Springs. “One card breach can have a significant impact.”
Merchants can ask to see photo ID, but contracts they have with credit card companies often bar them from declining a transaction if a customer refuses to show it.
“I think most people, like me, were surprised that merchants cannot already do this,” said state Sen. Bryan Hughes, R-Mineola, who authored the legislation. “The intent of the law is to give Texas businesses the right to take this common sense step of asking for an ID for a credit card transaction,” especially as fraud and identity theft become more common. Payments made using a mobile wallet are exempt from the photo ID measure.
Despite the law's intent, Hughes said that some credit card companies "are taking the position that their agreements (with merchants) will supersede or override" it.