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Secretary of State frames SB 438 as enabling charter for payment banks; bankers urge caution
Summary
Senate Bill 438 would enable state agencies to seek a new 'payment bank' charter, allowing an agency to contract directly with card networks and processors to reduce third‑party fees — but bankers urged robust regulation and cautioned about the state's current funding model for supervision.
Secretary of State staff told the Senate Committee on Commerce and Labor that Senate Bill 438 is intended as a narrow, enabling vehicle to allow state agencies to seek a new type of state bank charter — a payment bank — if companion legislation (AB 500) to authorize payment-bank charters is enacted.
"This bill creates the ability for the commission of financial institutions to charter a new type of bank, payment banks in the state of Nevada," Gabriel de Cara, chief deputy in the Secretary of State's office, said. De Cara explained that the office seeks authority so state agencies can explore taking payment-processing work in-house rather than paying commercial banks and processors a portion of the transaction fees. He used the Secretary of State's historical practice of absorbing credit-card processing fees and later moving those costs to customers as an example of where a state-chartered payment bank might reduce fee outflows to commercial banks.
Banking-industry representatives told the committee they are open to charter innovation but urged stronger guardrails. Connor Caine of the Nevada Bankers Association said the retail-payment system "is a long-standing trusted system that works efficiently and safely," and that any new entrants handling customer funds and sensitive payment data must meet rigorous licensing, supervision and insurance standards. The bankers also flagged concerns about the Financial Institutions Division's funding model: state-chartered banks (depositories) currently shoulder a large share of regulatory funding; a new charter and its regulatory burden could increase assessments on existing state-chartered banks unless a different funding arrangement is adopted.
Committee members asked why the language was not folded directly into AB 500; de Cara said the two bills evolved on different timelines and that the Secretary of State wanted to ensure an enabling path to save state processing costs even as AB 500 proceeded through the Assembly. He emphasized that SB 438, as amended at the hearing, would not by itself create a payment bank absent AB 500 and the Division of Financial Institutions' regulatory framework. The State Treasurer and the Financial Institutions Division participated in earlier conversations but offered technical questions rather than formal positions in the hearing.
No committee vote was recorded at the hearing; proponents and the bankers said they expect further work to coordinate supervision, statutory guardrails and fee-allocation approaches if the Legislature proceeds with payment-bank charters.
