District Of Columbia 2025-2026 Regular Session

District Of Columbia Council Bill B26-0138 Compare Versions

Only one version of the bill is available at this time.

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12	12	February 24, 2025
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14	14	Nyasha Howard
15	15	Secretary to the Council
16	16	Council of the District of Columbia
17	17	1350 Pennsylvania Avenue, NW
18	18	Washington, D.C. 20004
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20	20	Dear Secretary Howard:
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22	22	Today, I am introducing the “Fair Swipe Act of 2025”, along with Councilmembers Anita Bonds,
23	23	Wendell Felder, Matthew Frumin, Christina Henderson, Janeese Lewis George, Brianne K.
24	24	Nadeau, Brooke Pinto, and Robert C. White, Jr. Please find enclosed a signed copy of the
25	25	legislation.
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27	27	Restaurants and eateries, large and small, and other local business retailers are the cornerstones
28	28	of our communities and an engine of our economy. According to the National Restaurant
29	29	Association, in 2024, the restaurant industry exceeded $1.1 trillion in sales and remitted $216.7
30	30	billion in taxes for all levels of government. However, providing this tax collection service for
31	31	jurisdictions comes at a high cost for business owners because when a consumer decides to pay
32	32	their bill with either their debit or credit card, the debit or credit card network charges an
33	33	interchange fee (also known as a “swipe fee”) for the transaction. A swipe fee, which averages 2-
34	34	4% per transaction, is also charged on the tax and tips portion of the bill, even though the
35	35	business never pockets that money and passes the taxes and tips portion on to the jurisdiction
36	36	or employee. A swipe fee on the sales and tax portions of a bill unfairly eats into the hard-earned
37	37	profits of our local business retailers and should stay in their pockets so that they can continue
38	38	to grow their businesses.
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40	40	This bill would prohibit the charging of interchange fees on the sales tax and gratuity portions of
41	41	credit and debit card transactions. It also outlines the process by which a merchant can submit
42	42	tax and gratuity documentation and receive credits for the amount of interchange fees charged
43	43	per electronic payment transaction. For violations of the prohibitions created in this bill, it would
44	44	impose a civil penalty of $1,000 per electronic payment transaction. Finally, the bill includes a
45	45	non-severability clause, thereby ensuring key provisions do not solely burden District- chartered
46	46	banks should the legislation be challenged in court. 2
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49	49	This legislation would allow the District to ensure that all merchants can keep their hard-earned
50	50	profits in their pockets by recovering these fees either at the point of sale or through retroactive
51	51	reimbursement by a financial institution. This is a step toward ensuring our local businesses
52	52	continue to have a fair shot at post-pandemic recovery and can thrive in an environment that
53	53	recognizes their challenges and creates opportunities for owners/operators and workers to
54	54	succeed.
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56	56	Sincerely,
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60	60	Councilmember Charles Allen, Ward 6
61	61	Chairperson, Committee on Transportation & the Environment
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63	63	___________________________ ______________________________ 1
64	64	Councilmember Anita Bonds Councilmember Charles Allen 2
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67	67	___________________________ ______________________________ 5
68	68	Councilmember Wendell Felder Councilmember Matthew Frumin 6
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71	71	___________________________ ______________________________ 9
72	72	Councilmember Christina Henderson Councilmember Janeese Lewis George 10
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75	75	___________________________ ___________________________ 13
76	76	Councilmember Brianne K. Nadeau Councilmember Brooke Pinto 14
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79	79	___________________________ 17
80	80	Councilmember Robert C. White, Jr. 18
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84	84	A BILL 22
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86	86	________ 24
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89	89	IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 27
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91	91	_________________ 29
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94	94	To prohibit the charging of interchange fees on the sales tax and gratuity portions of credit and 32
95	95	debit card transactions, to outline the process by which a merchant can submit tax and 33
96	96	gratuity documentation and receive a credit for the amount of interchange fees charged 34
97	97	per electronic payment transaction, to impose a civil penalty of $1,000 per electronic 35
98	98	payment transaction for violations of this act, and to provide that this act is non-36
99	99	severable. 37
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101	101	BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this 39
102	102	act may be cited as the “Fair Swipe Act of 2025”. 40
103	103	Sec. 2. Definitions. 41
104	104	For the purposes of this act, the term: 42
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106	106	(1) "Acquirer bank" means a member of a payment card network that contracts 43
107	107	with a merchant for the settlement of electronic payment transactions. An acquirer bank may 44
108	108	contract directly with merchants or indirectly through a processor to process electronic payment 45
109	109	transactions. 46
110	110	(2) "Authorization" means the process through which a merchant requests 47
111	111	approval for an electronic payment transaction from the issuer. 48
112	112	(3) "Clearance" means the process of transmitting final transaction data from a 49
113	113	merchant to an issuer for posting to the cardholder's account and the calculation of fees and 50
114	114	charges, including interchange fees, that apply to the issuer and the merchant. 51
115	115	(4) "Credit card" means a card, plate, coupon book, or other credit device existing 52
116	116	for the purpose of obtaining money, property, labor, or services on credit. 53
117	117	(5) "Debit card" means a card or other payment code or device issued or approved 54
118	118	for use through a payment card network to debit an asset account, regardless of the purpose for 55
119	119	which the account is established, whether authorization is based on a signature, a personal 56
120	120	identification number, or other means. The term includes a general use prepaid card, as defined 57
121	121	in 15 U.S.C. § 1693l-1, but does not include paper checks. 58
122	122	(6) "Electronic payment transaction" means a transaction in which a person uses a 59
123	123	debit card, a credit card, or other payment code or device issued or approved through a payment 60
124	124	card network to debit a deposit account or use a line of credit, whether authorization is based on 61
125	125	a signature, a personal identification number, or other means. 62
126	126	(7) "Gratuity" means a voluntary monetary contribution to an employee from a 63
127	127	guest, patron, or customer in connection with services rendered. 64
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129	129	(8) "Interchange fee" means a fee established, charged, or received by a payment 65
130	130	card network for the purpose of compensating the issuer for its involvement in an electronic 66
131	131	payment transaction. 67
132	132	(9) "Issuer" means a person issuing a debit card or credit card or the issuer's agent. 68
133	133	(10) "Merchant" means a person that accepts electronic payment transactions and 69
134	134	collects and remits a tax. 70
135	135	(11) "Payment card network" means an entity that: 71
136	136	(A) Directly or through licensed members, processors, or agents, provides 72
137	137	the proprietary services, infrastructure, and software to route information and data for the 73
138	138	purpose of conducting electronic payment transaction authorization, clearance, and settlement; 74
139	139	and 75
140	140	(B) A merchant uses to accept as a form of payment a brand of debit card, 76
141	141	credit card, or other device that may be used to carry out electronic payment transactions. 77
142	142	(12) "Person" means any individual, firm, public or private corporation, 78
143	143	government, partnership, association, or any other organization or entity. 79
144	144	(13) "Processor" means an entity that facilitates, services, processes, or manages 80
145	145	the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect 81
146	146	to any electronic payment transaction. 82
147	147	(14) "Settlement" means the process of transmitting sales information to the 83
148	148	issuing bank for collection and reimbursement of funds to the merchant and calculating and 84
149	149	reporting the net transaction amount to the issuer and merchant for an electronic payment 85
150	150	transaction that is cleared. 86
151	151	(15) "Tax" means sales and use tax imposed pursuant to D.C. Official Code § 47-87
152	152	2002. 88
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154	154	(16) "Tax and gratuity documentation" means documentation or data sufficient for 89
155	155	the payment card network to determine the total amount of the electronic payment transaction 90
156	156	and the tax or gratuity amount of the transaction. Tax documentation may be related to a single 91
157	157	electronic payment transaction or multiple electronic payment transactions aggregated over a 92
158	158	period of time. Examples of tax documentation include invoices, receipts, journals, ledgers, and 93
159	159	tax returns filed with the Office of Tax and Revenue. 94
160	160	Sec. 3. Prohibition on charging of interchange fees on sales tax part of credit and debit 95
161	161	card transactions. 96
162	162	(a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive 97
163	163	or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment 98
164	164	transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount 99
165	165	as part of the authorization or settlement process for the electronic payment transaction. The 100
166	166	merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement 101
167	167	process to avoid being charged interchange fees on the tax or gratuity amount of an electronic 102
168	168	payment transaction. 103
169	169	(b) A merchant that does not transmit the tax or gratuity amount data in accordance with 104
170	170	this section as part of the authorization or settlement process may submit tax and gratuity 105
171	171	documentation for the electronic payment transaction to the acquirer bank or its designee no later 106
172	172	than 180 days after the date of the electronic payment transaction, and, within 30 days after the 107
173	173	merchant submits the necessary tax and gratuity documentation, the issuer or payment card 108
174	174	network shall credit to the merchant the amount of interchange fees charged on the tax or 109
175	175	gratuity amount of the electronic payment transaction. 110
176	176	(c) This section shall not be construed as imposing liability on a payment card network 111
177	177	for the accuracy of the tax or gratuity data reported by the merchant. 112
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179	179	(d) It shall be unlawful for an issuer, a payment card network, an acquirer bank, or a 113
180	180	processor to alter or manipulate the computation and imposition of interchange fees by 114
181	181	increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit or 115
182	182	debit card transaction not attributable to taxes or gratuities to circumvent the effect of this 116
183	183	section. 117
184	184	(e) An issuer, a payment card network, an acquirer bank, a processor, or other designated 118
185	185	entity that has received the tax or gratuity documentation and violates subsection (a) of this 119
186	186	section shall be subject to a civil penalty of $1,000 per electronic payment transaction and shall 120
187	187	refund the merchant the interchange fee calculated on the tax or gratuity amount relative to the 121
188	188	electronic payment transaction. 122
189	189	Sec. 4. Non-severability. 123
190	190	If any provision of section 3 of this act or its application to any person or circumstance is 124
191	191	held to be unconstitutional, beyond the statutory authority of the Council, or otherwise invalid, 125
192	192	then all provisions of this act shall be deemed invalid. 126
193	193	Sec. 5. Fiscal impact statement. 127
194	194	The Council adopts the fiscal impact statement in the committee report as the fiscal 128
195	195	impact statement required by section 4a of the General Legislative Procedures Act of 1975, 129
196	196	approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1-301.47a). 130
197	197	Sec. 6. Effective date. 131
198	198	This act shall take effect following approval by the Mayor (or in the event of veto by the 132
199	199	Mayor, action by the Council to override the veto), a 30-day period of congressional review as 133
200	200	provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 134
201	201	24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(1)), and publication in the District of 135
202	202	Columbia Register. 136