Regular Session
Office of Consumer Credit Commissioner (OCCC)
Key implementation requirements and action items for compliance with this legislation
Review agreements with third-party payment processors immediately. If your vendor charges you more than $10 per transaction, you cannot pass the excess cost to the consumer. You must absorb the difference or renegotiate. Ensure Retail Installment Contracts do not mandate electronic payment as the exclusive payment method.
Customer Service Representatives (CSRs) require immediate training on mandatory disclosure scripts. Staff must be instructed to read the fee disclosure and obtain verbal assent *before* processing any payment. Failure to do so renders the fee illegal.
Implement "hard stop" logic in payment portals and CRM systems to capture timestamped proof of fee disclosure and consumer acceptance (e.g., call recordings or server logs of checkbox acknowledgments). Maintain an internal accounting file justifying the fee amount based on actual processing expenses.
Update billing software to cap convenience fees at the lesser of $10 or 5% of the payment amount. This is a dynamic calculation; a $150 payment cannot carry a $10 fee (5% is $7.50).
The statute allows fees "reasonably related to the expense incurred" without defining if overhead (labor/software) is included or only direct interchange fees. Until the OCCC clarifies, adopt a conservative approach based on direct vendor costs. Additionally, the prohibition on making electronic payment the "expected" method creates risk for Auto-Pay incentive programs; the OCCC may scrutinize interest rate discounts tied to EFTs as a violation.
Our government affairs experts can walk you through this bill's specific impact on your operations.
Schedule ConsultationInformation presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
This bill's path through the Texas Legislature
BILL ANALYSIS |
| H.B. 4134 |
| By: Lujan |
| Pensions, Investments & Financial Services |
| Committee Report (Unamended) |
| BACKGROUND AND PURPOSE The bill author has informed the committee that the Office of Consumer Credit Commissioner perceives an ambiguity in current law regarding a borrower purchasing a motor vehicle in installments of electronic payments, allowing for an unregulated third party to charge and collect a fee from the customer for processing the payment but preventing the regulated creditor or account servicer from offering such payment methods to their own customers. Additionally, a creditor subject to that law may assess a late fee that does not exceed five percent of the entire installment if not paid within 15 days after the installment due date. H.B. 4134 seeks to clarify this ambiguity and help customers avoid a late fee by providing for certain creditors to offer their own customers various payment method options, including those that may be accompanied by a fee in order to expedite and apply the payment immediately to the customers' accounts.
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| CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
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| RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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| ANALYSIS H.B. 4134 amends the Finance Code to authorize the holder of a retail installment contract or the holder's agent to collect a fee for processing a retail buyer's electronic payment for a motor vehicle under the contract only if the following conditions apply: ·the fee is reasonably related to the expense incurred by the holder or holder's agent in processing the electronic payment; ·the fee does not exceed the lesser of $10 or five percent of the amount of the payment; and ·the holder or holder's agent: oallows the buyer to make a payment by a method other than an electronic payment that does not incur a fee; odoes not establish electronic payment as the expected form of payment; and oinforms the buyer, before the buyer agrees to make an electronic payment, of the amount of the fee to be charged; that the buyer may make a payment by an alternative method that does not incur a fee, including by check, cash, or money order; and that the holder or holder's agent may not establish electronic payment as the expected form of payment. The bill defines "electronic payment" as a payment made by credit card, debit card, electronic funds transfer, electronic check, or other electronic method. |
| EFFECTIVE DATE September 1, 2025.
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| H.B. No. 4134 | ||
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| relating to a convenience fee for processing electronic payments | ||
| for motor vehicles. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Subchapter E, Chapter 348, Finance Code, is | ||
| amended by adding Section 348.416 to read as follows: | ||
| Sec. 348.416. CONVENIENCE FEE FOR PROCESSING ELECTRONIC | ||
| PAYMENTS AUTHORIZED. (a) In this section, "electronic payment" | ||
| means a payment made by credit card, debit card, electronic funds | ||
| transfer, electronic check, or other electronic method. | ||
| (b) A holder of a retail installment contract or the | ||
| holder's agent may collect a fee for processing a retail buyer's | ||
| electronic payment under the contract only if: | ||
| (1) the fee is reasonably related to the expense | ||
| incurred by the holder or holder's agent in processing the | ||
| electronic payment; | ||
| (2) the fee does not exceed the lesser of $10 or five | ||
| percent of the amount of the payment; and | ||
| (3) the holder or holder's agent: | ||
| (A) allows the buyer to make a payment by a method | ||
| other than an electronic payment that does not incur a fee; | ||
| (B) does not establish electronic payment as the | ||
| expected form of payment; and | ||
| (C) informs the buyer of the following before the | ||
| buyer agrees to make an electronic payment: | ||
| (i) the amount of the fee to be charged | ||
| under this section; | ||
| (ii) that the buyer may make a payment by an | ||
| alternative method that does not incur a fee, including by check, | ||
| cash, or money order; and | ||
| (iii) that the holder or holder's agent may | ||
| not establish electronic payment as the expected form of payment. | ||
| SECTION 2. This Act takes effect September 1, 2025. | ||
| TO: | Honorable Stan Lambert, Chair, House Committee on Pensions, Investments & Financial Services |
| FROM: | Jerry McGinty, Director, Legislative Budget Board |
| IN RE: | HB4134 by Lujan (Relating to a convenience fee for processing electronic payments for motor vehicles.), As Introduced |
| Source Agencies: | 450 Department of Savings and Mortgage Lending, 451 Department of Banking, 466 Office of Consumer Credit Commissioner |
| LBB Staff: | JMc, FV, BFa |
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Common questions about HB4134
HB4134 authorizes holders of motor vehicle retail installment contracts to charge convenience fees for electronic payments, subject to a strict cap of the lesser of $10 or 5% of the payment amount. Immediate compliance is required regarding fee limits and mandatory pre-payment disclosures to avoid administrative penalties and restitution orders from the OCCC. Implementation Timeline Effective Date: June 20, 2025 Compliance Deadline: June 20, 2025.
HB4134 was authored by Texas Representative John Lujan during the Regular Session.
HB4134 was signed into law by Governor Greg Abbott on June 20, 2025.
HB4134 is enforced by Office of Consumer Credit Commissioner (OCCC).
The compliance urgency for HB4134 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
The cost impact of HB4134 is estimated as "low". This may vary based on industry and implementation requirements.
HB4134 addresses topics including financial, financial--general, credit & debit cards, electronic funds transfer and electronic information systems.
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