Texas joins New York and California in reshaping the alternative finance industry.
For years, states like California and New York have pioneered the regulation of MCAs. But now, Texas, one of the most pro-business states in America – with its historically light regulatory touch – has enacted legislation that doesn’t just call for disclosure and transparency, but rewrites the rules for how payments can be legally collected.
🚨 Texas Takes a Bold Stand
In June 2025, Texas enacted HB 700, a first-of-its-kind law that goes beyond disclosure and directly regulates how payments are collected in MCA transactions.
Beginning on September 1, 2025, funders will be prohibited from initiating automated ACH debits from Texas-based merchants unless they hold a perfected first-priority security interest in the merchant’s bank account. (Holland & Knight)
That means if you’re funding merchants located in Texas, or plan to, and you don’t have a perfected first-priority security interest, you can’t pull payments via ACH, according to deBanked.
🧭 Why This Matters to Brokers (Even Outside Texas)
Texas isn’t just another state. Known for its business-friendly environment and light regulatory touch, Texas stepping into the regulatory MCA space with such an aggressive approach may signal a much broader trend nationwide.
By enacting HB 700, Texas didn’t just pass a disclosure law — they potentially reshaped underwriting and funding practices.
Brokers who prioritize clarity and compliance will rise above the noise — and win bigger.
Even traditionally hands-off states, like Texas, are now prioritizing transparency, accountability, and merchant protection. Other states may soon follow, especially as regulators nationwide grow increasingly concerned with:
- MCA stacking
- Lack of transparent pricing, terms, and repayment structures
- Short-term commission incentives over long-term merchant outcomes
⚠️ But Let’s Be Clear: MCAs Aren’t the Problem
When used responsibly, MCAs can be valuable, flexible tools for small businesses in need of flexible financing.
The issue is not the product — it’s how some brokers overextend merchants with multiple advances, bury merchants in daily payments, and disappear after receiving their commission.
✅ What Brokers Should Do Right Now
🟩 Understand HB 700 — If you’re doing business in Texas and intend to debit merchant business accounts, make sure your ACH collections are backed by a properly filed first-position UCC-1.
🟩 Evaluate your ACH policies in other states. This may only be the first of several state-level reforms.
🟩 Audit your portfolio — Are your deals improving merchant cash flow or just extending the problem?
🟩 Work with compliant funders who are already building for a transparent, compliance-driven future.
🧱 Where Nexi Stands
At Nexi, we operate on one principle: trust builds long-term success.
That’s why we offer:
✅ Fully transparent, plain language, compliant deal terms
✅ Reverse Consolidation Weekly Purchase Program — built to help merchants streamline and simplify their repayments when burdened by multiple MCAs
✅ A compliance-forward approach that helps brokers avoid risk and stand out as real partners and build sustainable, long-term relationships.
💡 Final Thought
Texas may be known for doing things big, but when it comes to MCA reform, it’s doing something bold and deliberate. By going beyond disclosure and regulating how payments can be collected, Texas is setting a precedent that other states may soon follow.
Brokers who adjust early – with clear, compliant, and merchant-focused practices – will be the ones merchants trust in a more regulated, more sustainable future.
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