As of January, a new state law will allow merchants in Texas to require photo ID of customers who pay with a debit or credit card. But contracts they have with credit card companies often forbid them to decline a transaction if a customer won’t show ID. Some credit card companies say their contracts with merchants should take precedence over the new law.
Attorney Joe Slovacek, partner with Hoover Slovacek, says credit card companies naturally want to see every transaction take place that possibly can. “I think a lot of that’s driven by their interest in the recurring interest charges and finance charges,” he says, “which I presume that’s where the real money is with a credit card company.”
Slovacek points out that nobody has a right to a credit card. “A credit card is a privilege,” he observes. “And I think that a credit card company, through its application process, and its private contract with the retailers, have every right in the world to set terms and conditions on which consumers can exercise that privilege.”
To the extent that credit card companies may object to the new law, Slovacek notes that—like other requirements to show ID—it’s a measure to help prevent fraud through identity theft. “You can vote without a photo ID,” he points out, noting the irony. “But you don’t get to borrow money with a credit card without a photo ID.” If that’s a problem, he suggests using the almost forgotten medium of cash.