Nevada bill would create ‘payments bank’ charter to attract fintech firms and fees

Assembly Bill 500 would create a new Nevada Payments Bank charter for institutions that focus on payment processing rather than lending, with supporters saying the framework could bring large private-sector operations and new state revenue.

Proponents including sponsor Assemblymember Steve Yeager and Brian Wachter of the Retail Association of Nevada told the Assembly Ways and Means Committee that a Nevada charter could reduce the fees small businesses pay today and generate substantial state revenue from a small per-transaction assessment. Wachter said a 0.025% transaction fee in a conservative scenario could translate into “tens of millions” and, if larger firms relocated payment operations to Nevada, could produce hundreds of millions annually. He said companies such as PayPal and large payment processors have told committee members they would consider a Nevada charter.

Supporters framed AB 500 as a narrow, supervised innovation: payments banks would not make loans or hold retail deposits in the usual way, and licensing would require oversight, capital and either FDIC insurance or an approved private equivalent. ‘‘This would allow payment companies to apply for access to systems like Fedwire, ACH, and FedNow,’’ Assemblymember Yeager said, adding that the legislation is designed to protect consumers and produce state revenue without raising taxes.

Opponents — notably the Office of Financial Institutions (FID), the Nevada Bankers Association and state-chartered credit unions — urged caution. FID’s commissioner, Sandy O’Loughlin, said the division’s fiscal note reflects real staffing and examination costs needed to supervise a new charter type, including travel if corporate headquarters are out of state. State-chartered credit unions and banks said regulatory assessments could shift startup supervisory costs onto existing state-chartered institutions unless the bill and appropriations explicitly prevent that.

The bill contains a host of technical details and amendments under discussion: which entity collects the new transaction fee (the treasurer was inserted at the committee’s request), application and licensing fees, and criteria for deposit insurance versus surety or private insurance where FDIC coverage is not used. Proponents also offered language removing ‘‘reputational risk’’ as an independent supervisory category, arguing federal regulators are moving away from that term and that supervision should focus on solvency, liquidity and compliance.

Regulators and industry groups sought clarity on two practical points: (1) who pays the bill’s upfront regulatory cost before ongoing license fees ramp up, and (2) how the state will ensure supervision does not cross-subsidize the new charter’s startup costs from existing licensees. The Nevada Bankers Association and credit unions asked that the Legislature make clear that the general fund cover initial regulatory investments so existing assessments do not rise.

Proponents stressed the state could capture fees now leaving Nevada’s economy and that consumers and small businesses could see lower merchant fees if payment processing is routed through Nevada-chartered entities. Several trade groups and local business associations testified in support; labor and consumer groups were neutral or not present.

Where it stands: The committee heard extensive testimony and follow-up questions about the fiscal note and regulatory scope. Supporters asked legislators to weigh potential long-term state revenue and economic development against the near-term cost and regulatory complexity. No final legislative action on AB 500 was recorded in the hearing transcript; sponsors and regulators said they would continue drafting technical amendments.

Looking ahead: If the bill advances, key issues for lawmakers will include how the first months of regulation will be funded, whether treasury or another office receives and administers the per-transaction fee, and whether enhanced consumer-protection reporting and examiner resources are provided up-front. Supporters said firms have already asked to be ‘‘in Nevada on day one’’ if a charter is available; regulators said they need time and staffing to perform oversight.