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S 9656

Prohibits fees for any service rendered through a bank relating to the use of an electronic benefit transfer card issued by the state or certain departments or agencies thereof

2025 Regular Session Introduced by James Sanders

Prevents banks and ATMs in New York from charging consumer fees for using EBT cards, while allowing interbank fees between institutions.

SUBSTITUTED BY A3304B
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Bill Summary · S 9656

Legislative Bill Summary – New York S.9656 (2025-2026)

Title

Prohibits fees for electronic benefit transfer (EBT) services related to the use of an EBT card issued by the state or certain departments/agencies.

Purpose and Intent

To ensure that individuals receiving public benefits via electronic benefit transfer cards are not charged fees by banking organizations, out-of-state banks operating in New York, or ATM operators for the use of EBT services. The bill preserves certain costs between financial institutions (interchange and other inter-institution fees) while prohibiting consumer-facing charges tied to EBT card use.

Key Provisions

Section 9-aa (New) – Definitions

  • Electronic benefit transfer services: Any service connected with the use of an EBT card, including deposits, withdrawals, electronic fund transfers, checks, reconciliation, reporting, or electronic cash management for benefit programs.
  • Electronic benefit transfer card: Cards or devices linked to the EBT system that allow access to public assistance or benefit funds. This includes:
    • Cards issued by the state or social services districts for public assistance, medical assistance, food stamps, etc.
    • Cards tied to unemployment insurance, occupational training act programs, adoption subsidies, or New York child support programs.

Section 9-bb (New) – Prohibition on Fees by Banks and ATM Operators

  • Banking organizations in NY (including local banks, out-of-state banks with NY branches, or foreign banks licensed in NY): May not impose any fee or surcharge on a consumer, cardholder, or benefit recipient for EBT services related to the use of an EBT card.
  • ATMs: No operator or owner of an ATM shall impose any fee/surcharge for EBT services related to the use of an EBT card.

Section 9-cc (New) – Fee Exclusions

  • The prohibition does not prevent:
    • Interchange fees, processing fees, switch fees, settlement fees, network connectivity fees, or other fees charged between financial institutions, payment card networks, processors, or program administrators in connection with EBT transactions (i.e., fees paid between entities, not charged to the individual consumer).

Sections 9-dd to 9-ff (New) – Applicability and Remedies

  • Exceptions for national or federal institutions: The section does not apply to national banks, federal savings banks/loans, federal credit unions, or other US-chartered entities (and ATM ownership by these entities is exempt).
  • Severability: If any part is invalid, the rest remains in effect.
  • Rulemaking: NY Superintendent of Financial Services, in consultation with the Office of Temporary and Disability Assistance, may promulgate implementing regulations.

Section 2 – Effective Date

  • The act takes effect on the 180th day after becoming law.
  • Applies to contracts for EBT services entered into on or after the effective date between the state (or its agencies) and any entity subject to NY banking/law/regulatory frameworks.

Who Is Affected

  • Primary beneficiaries: Individuals and households receiving benefits through EBT programs (e.g., cash assistance, food assistance, medical assistance, unemployment-related programs) who rely on EBT cards.
  • Banks and ATM operators: Restrictions on charging consumer-facing EBT-related fees for use of EBT cards within New York.
  • State and program administrators: Entities that contract with financial institutions to provide EBT services; subject to the new fee restrictions.
  • Interbank/Network Relationships: Interchange and other inter-institution fees remain allowed, per section 4.

Timeline and Procedural Details

  • Intro/Referral: Introduced March 31, 2026; referred to Senate Banks Committee.
  • Effective Date: 180 days after the law's enactment.
  • Application Scope: Applies to contracts entered into on or after the effective date between the state/agencies and entities covered by NY banking law/general business/financial services law.

Practical Impact

  • Reduces or eliminates consumer charges for EBT card use at banks and ATMs in New York.
  • Shifts potential cost considerations to interbank/processing fees that may be borne by financial institutions or networks.
  • Requires rulemaking to implement and clarify enforcement, with oversight by the NY Department of Financial Services and the Office of Temporary and Disability Assistance.

If you’d like, I can provide a plain-language explainer for non-expert readers or track potential fiscal impacts based on comparable consumer-fee protections.

Compiled from official sources — confirm details with the bill’s official record.

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