STATE OF NEW YORK ________________________________________________________________________ 9561 IN ASSEMBLY March 20, 2024 ___________ Introduced by M. of A. KIM -- read once and referred to the Committee on Banks AN ACT to amend the state finance law, the financial services law and the New York state urban development corporation act, in relation to establishing the empire state enhanced public payment system act The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. This act shall be known and may be cited as the "enhanced 2 public payment system act". 3 § 2. Legislative intent. Many New York residents, including individ- 4 uals who receive public benefits and payments related to nutrition and 5 social services, are targets of identity and consumer theft. Similarly, 6 many New York residents who rely on Medicaid home and community care 7 services are victims of exploitation by private intermediaries that 8 manage public payments. 9 A system of individual digital wallets or payment accounts, linked to 10 a single master account that enables payments to move between such indi- 11 vidual wallets or payment accounts, is now easy to construct and admin- 12 ister with the use of secure digital payment technologies. The state of 13 New York annually disburses more than thirty billion dollars of social 14 and health benefits, including home care services, and fifty-five 15 billion dollars in the form of tax credits, procurement payments, 16 pension payouts, and other program dispersals, all of which can readily 17 be disbursed via a system of individual wallets or accounts linked to a 18 master account. The state of New York also receives more than fifty-five 19 billion dollars annually in the form of service payments, tax monies, 20 licensing fees, civil fines and other remittances, all of which can be 21 readily paid into a master account from individual wallets or accounts 22 of the kind just described. 23 A system of individual digital wallets or payment accounts linked to a 24 master account could accordingly function as a state-provided and admin- 25 istered payment infrastructure, in and through which value could be 26 accumulated, stored, grown and exchanged in 'real-time,' with no need 27 for fees or other forms of exploitative value extraction, thereby assur- EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD14884-01-4A. 9561 2 1 ing that all New York residents are: (a) able to receive real-time 2 payments; (b) able to create, receive and grow wealth; and (c) empowered 3 to participate fully in a growing state economy suffering no shortage of 4 currency or forgoing of commerce. 5 § 3. The state finance law is amended by adding a new section 4-b to 6 read as follows: 7 § 4-b. Empire state enhanced public payment system. 1. Definitions. 8 As used in this section, the following terms shall have the following 9 meanings: 10 (a) "master account" means a digital account which enables payments to 11 be transferred between individual wallets; 12 (b) "individual wallet" means a digital account which: 13 (i) is linked to a master account; 14 (ii) enables a resident to send or receive payment to any entity of 15 the state or to another resident; 16 (iii) allows value to be accumulated, stored, grown and exchanged; and 17 (iv) is not subject to fees or other value extraction for use of the 18 individual wallet; 19 (c) "resident" means an individual or a domestic corporation or 20 foreign corporation authorized to do business in the state; 21 (d) "public payment system" means the empire state enhanced public 22 payment system established pursuant to subdivision two of this section; 23 (e) "state entity" means any department, board, bureau, division, 24 commission, committee, council, office of the state, or other govern- 25 mental entity with statewide jurisdiction; 26 (f) "payment service provider" means an entity which provides online 27 services for accepting electronic payments by a variety of methods, 28 including, but not limited to, credit card, direct debit, and bank 29 transfer; and 30 (g) "banked" means a payment network making real-time payments for 31 consumers, businesses and banks. 32 2. The department of financial services, in cooperation with the 33 department of taxation and finance, the office of the comptroller, the 34 New York state and local retirement system, the department of labor, the 35 department of health, the department of social services, and other state 36 agencies shall develop, establish, and maintain a value storage and 37 payment platform to be known as the empire state enhanced public payment 38 system. The empire state enhanced public payment system shall consist of 39 a digital master account and coordinate a system of individual wallets 40 which shall be maintained and administered by the urban development 41 corporation as described in subdivision thirty-one of section five of 42 section one of chapter one hundred seventy-four of the laws of nineteen 43 hundred sixty-eight, constituting the New York state urban development 44 corporation act. 45 3. All funds disbursed to residents by a state entity or any other 46 state instrumentality shall be made out of the master account to indi- 47 vidual wallets linked to the master account via enhanced public payment 48 system and any remittance made to a state entity or other state instru- 49 mentality by a resident shall be permitted to be made, at the option of 50 the resident making the remittance, from the resident's individual 51 wallet. 52 4. All residents shall have the ability to make payments to, and 53 receive payments from, other residents through links among individual 54 wallets on the value ledger. Each payment shall be effected by a simul- 55 taneous crediting of the payee's individual wallet and an equal debiting 56 of the payer's individual wallet. Such payments shall be able to beA. 9561 3 1 directed by the means of payment cards, wire services, smart-device 2 apps, or other electronic funds transfer. 3 5. Any resident making payment to, or receiving payment from, any 4 other resident may require that the payee or payer accept or make 5 payment via the system of individual wallets on the enhanced public 6 payment system; provided, however, that residents who make payments to, 7 or receive payments from, other residents shall not be required to tran- 8 sact with each other on the public payment system in the event that no 9 party to the transaction opts to do so and further provided that no 10 transacting party's opting not to do so is coerced by any other trans- 11 acting party or associates of such transacting party. 12 6. Any commercial bank, other financial institution, or payment 13 service provider doing business in the state shall be required to: 14 (a) provide for full interoperability between individual wallets on 15 the enhanced public payment system and any demand deposit or transaction 16 account maintained by the commercial bank, other financial institution, 17 or payment service provider for the holders of such individual wallets; 18 and 19 (b) permit all holders of individual wallets to make deposits into and 20 withdrawals from such individual wallet via any automated teller 21 machine, teller window, or other deposit or withdrawal facility the 22 bank, financial institution, or payment service provider offers to 23 customers. There shall be no pecuniary or other charge assessed for 24 access to individual wallets; any costs associated with access to and 25 use of individual wallets shall be considered an incident of such 26 commercial bank, other financial institution, or payment service provid- 27 er's status as a publicly licensed financial utility. 28 7. The department of financial services shall also develop and make 29 available at no cost a downloadable smart-device application to be known 30 as the empire state enhanced public payment app through which residents 31 can access and receive and make payments into and out of individual 32 wallets. All entities operating in the state that accept payments via 33 smart-device applications of any kind shall be required to accept 34 payments via the enhanced public payment application at the option of 35 any payer wishing to pay via such enhanced public payment application. 36 8. The department of taxation and finance, the New York state and 37 local retirement system, the department of health and the department of 38 social services, as the state's principal disbursers and receivers of 39 funds, credits, and remittances, shall exercise special care in assist- 40 ing with and promoting the establishment and wide use of the enhanced 41 public payment system, in order to hasten both: 42 (a) the full banking of the state's unbanked and vulnerable individ- 43 uals; and 44 (b) inclusion of the state's currently marginalized residents in the 45 process of value creation, wealth accumulation, and commercial exchange. 46 9. The department of financial services shall: 47 (a) ensure compliance by all banks, other financial institutions, and 48 payment service providers with the requirements of this section; 49 (b) prohibit and prevent any other person or company in the financial 50 services or payments industries from exploiting enhanced public payment 51 wallet holders or otherwise subverting the value-creating and commerce- 52 promoting purposes of this section, including by offering advances on 53 anticipated state remittances for fees; and 54 (c) ensure compliance with state banking, regulatory, and digital and 55 financial privacy laws by all entities that oversee or transact via the 56 enhanced public payment system. The department, in coordination with theA. 9561 4 1 urban development corporation, shall also coordinate with any relevant 2 regulatory agency of the United States to ensure compliance with federal 3 banking, regulatory, employee benefit and any other applicable federal 4 laws. 5 10. The department of financial services shall be authorized to coor- 6 dinate with its counterpart agencies in other states and territories of 7 the United States in connection with any common regulatory needs impli- 8 cated or challenges raised by state enhanced public payment systems. 9 § 4. Section 301 of the financial services law is amended by adding a 10 new subsection (d) to read as follows: 11 (d) The superintendent shall have the power to direct the department 12 to develop, establish, and maintain the empire state enhanced public 13 payment system established pursuant to section four-b of the state 14 finance law. The superintendent shall also have the power to direct the 15 department to coordinate with agencies in other states and territories 16 of the United States the regulatory needs or challenges raised by state 17 enhanced public payment systems. 18 § 5. Section 5 of section 1 of chapter 174 of the laws of 1968, 19 constituting the New York state urban development corporation act, is 20 amended by adding three new subdivisions 31, 32 and 33 to read as 21 follows: 22 (31) To maintain and administer, in consultation with the department 23 of financial services, the department of labor, the department of health 24 and the department of social services, the empire state enhanced public 25 payment system established pursuant to section four-b of the state 26 finance law, with a view to encouraging the expansion of commerce and 27 the broad growth and accumulation of wealth in the state. The corpo- 28 ration, in consultation and coordination with the department of finan- 29 cial services, the department of labor, the department of health, the 30 department of social services, the department of taxation and finance 31 and the New York state and local retirement system, shall observe and 32 build into the empire state enhanced public payment system strict 33 compliance with the highest standards of commercial and financial data 34 privacy. Such standards shall establish, at a minimum, that: 35 (a) no wealth accumulation or spending activity of any sort that makes 36 use of the enhanced public payment system shall be shared with, inti- 37 mated to, or sold to any non-governmental person or entity; 38 (b) any sharing of information with governmental entities shall be 39 solely for purposes of optimizing administration of the empire state 40 enhanced public payment system or for law enforcement purposes; 41 (c) any personal data that is not being used solely to assist the 42 person whose data is being accessed and that is being used for adminis- 43 trative purposes shall be cryptographically anonymized; 44 (d) any personal data shared with law enforcement authorities shall be 45 shared solely in strict compliance with the fourth amendment to the 46 United States constitution and any and all other state, federal and 47 local legal constraints that protect the rights of suspected or accused 48 persons and the empire state enhanced public payment system shall not 49 lessen the degree of legally assured data privacy of New York residents; 50 and 51 (e) any and all practicable measures possible shall be taken to 52 prevent accidental data privacy breaches stemming from outside or inad- 53 vertent disclosure. 54 (32) To explore and negotiate possible interstate compacts enabling 55 the growth of enhanced public payment systems across multiple states, 56 regions, and territories of the United States. The corporation, as theA. 9561 5 1 principal administrator of the enhanced public payment system, shall 2 reach out to and consult with counterpart agencies in other states, with 3 a view to assisting with the development of similar value storage and 4 payment platforms in such states and with the goal of the possible 5 interoperability of such platforms with the empire state enhanced public 6 payment system. 7 (33) To explore and negotiate possible pilot programs enabling the 8 growth and spread of an enhanced public payment system across the broad- 9 er United States. As the principal administrator of the enhanced public 10 payment system established pursuant to section four-b of the state 11 finance law, the corporation shall be authorized to reach out to and 12 consult with the federal reserve bank of New York, the federal reserve 13 board of the United States, and the department of treasury of the United 14 States, with a view to possibly assisting such entities with the devel- 15 opment of a national value storage and payment platform similar to the 16 enhanced public payment system. 17 § 6. Severability. If any clause, sentence, paragraph, subdivision, 18 section or part of this act shall be adjudged by any court of competent 19 jurisdiction to be invalid, such judgment shall not affect, impair, or 20 invalidate the remainder thereof, but shall be confined in its operation 21 to the clause, sentence, paragraph, subdivision, section or part thereof 22 directly involved in the controversy in which such judgment shall have 23 been rendered. It is hereby declared to be the intent of the legislature 24 that this act would have been enacted even if such invalid provisions 25 had not been included herein. 26 § 7. This act shall take effect immediately. Effective immediately, 27 the addition, amendment and/or repeal of any rule or regulation neces- 28 sary for the implementation of this act on its effective date are 29 authorized to be made and completed on or before such effective date.