The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Banking and Insurance
BILL: SB 564
INTRODUCER: Senator Hutson
SUBJECT: Interchange Fees on Taxes
DATE: March 14, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Moody Knudson BI Pre-meeting
2. CM
3. RC
I. Summary:
Senate Bill 564 prohibits payment card networks from charging an interchange fee on any tax
that is separately itemized on a sales invoice, sales slip, or other evidence of sale in any
electronic payment transaction.
If the merchant or seller transmits to the payment card network the tax amount data of an
electronic payment transaction before the settlement of funds, the payment card network must
deduct the amount of tax imposed from the calculation of interchange fees specific to each form
or type of electronic payment transaction. If not, the merchant or seller may thereafter submit to
the payment card network proof of tax amounts collected on sales subject to an interchange fee
and the payment card network must promptly rebate any interchange fee charged on the tax
collected by crediting the merchant or seller’s settlement account.
A payment card network that violates these provisions is subject to a civil penalty of up to
$1,000 per violation and must refund the interchange fees charged on any tax amount of an
electronic payment transaction.
The bill defines several terms, including credit card, debit card, electronic payment transaction,
interchange fee, issuer, payment card network, settlement, and tax.
See Section V. Fiscal Impact Statement.
The bill is effective July 1, 2023.
REVISED: BILL: SB 564 Page 2
II. Present Situation:
Financial Institutions Code
The Florida Office of Financial Regulation (OFR) is responsible for all activities of the Financial
Services Commission relating to the regulation of banks, credit unions, other financial
institutions, finance companies, and the securities industry.
1
The OFR has three divisions: the
Division of Consumer Finance, the Division of Financial Institutions, and the Division of
Securities. The OFR also has a Bureau of Financial Investigations, which functions as a criminal
justice agency and has a separate budget.
2
Florida law defines the term “financial institution” as a state or federal savings or thrift
association, bank, savings bank, trust company, international bank agency, international banking
corporation, international branch, international representative office, international administrative
office, international trust entity, international trust company representative office, qualified
limited service affiliate, credit union, or an agreement corporation operating pursuant to s. 25 of
the Federal Reserve Act, 12 U.S.C. s. 601 et seq. or Edge Act corporation organized pursuant to
s. 25(a) of the Federal Reserve Act, 12 U.S.C. ss. 611 et seq.
3
Financial institutions may be either state or federally chartered. OFR’s Division of Financial
Institutions provides general supervision over all state financial institutions, their subsidiaries,
and service corporations,
4
and is charged with the administration of the financial institutions
codes, which apply to all state-authorized or state-chartered financial institutions and to the
enforcement of all laws relating to state-authorized or state-chartered financial institutions.
5
The
specific chapters under the financial institutions codes, which govern state-chartered financial
institutions, are:
Chapter 655, F.S. – Financial Institutions Generally
Chapter 657, F.S. – Credit Unions
Chapter 658, F.S. – Banks and Trust Companies
Chapter 660, F.S. – Trust Business
Chapter 662, F.S. – Family Trust Companies
Chapter 663, F.S. – International Banking
Chapter 665, F.S. – Capital Stock Associations
Chapter 667, F.S. – Savings Banks
6
As of June 30, 2020, the Division of Financial Institutions regulates 197 financial institutions:
7
69 banks
66 credit unions
21 international bank offices
1
Section 20.121(3)(a)2., F.S.
2
Id.
3
Section 655.005(1)(i), F.S.
4
Section 655.012(1), F.S.
5
Sections 655.001(1) and 655.012(1), F.S.
6
Section 655.005(1)(k), F.S.
7
The OFR, Fast Facts (2021 ed.), available at: https://flofr.gov/sitePages/documents/FastFacts.pdf (last visited Mar. 14,
2023). BILL: SB 564 Page 3
15 trust companies
16 family trust companies
10 qualified limited service affiliates
Payment card networks or card associations, such as Visa and MasterCard, do not meet the
definition of financial institution and, therefore, are not currently regulated by the OFR.
8
Electronic Payment Transactions
In 1958, Bank of America launched the first credit card
9
payment program with revolving credit
known as BankAmericard in the U.S.
10
In 1966, the Bank of Delaware launched the first debit
card
11
pilot program.
12
Over time credit card and debit cards have become a common way to pay
for goods and services. Several key players are involved in processing credit card and debit card
transactions, including acquiring banks or contracted processors,
13
payment card networks or
bank card associations,
14
and issuers or issuing banks.
15
Processing credit card or debit card
transactions requires several steps, including gathering sales information from the merchant,
obtaining authorization for the transaction, collecting funds from the issuing bank, and making
payment to the merchant.
16
8
The OFR, Agency Analysis for SB 564 (2023), p. 2, Mar. 14, 2023 (on file with the Senate Committee on Banking and
Insurance).
9
15 U.S.C. s. 1602(l) defines “credit card” as any card, plate, coupon book or other credit device existing for the purpose of
obtaining money, property, labor, or services on credit.
10
Visa, Inc., What We Do, available at: What we do | Unlocking opportunities for everyone | Visa (last visited Mar. 12,
2023).
11
15 U.S.C. s. 1693o-2.(c)(2) defines “debit card” as (A) any card, or other payment code or device, issued or approved for
use through a payment card network to debit an asset account (regardless of the purpose for which the account is established),
whether authorization is based on signature, PIN, or other means; (B) includes a general-use prepaid card, as that term is
defined in s. 15 U.S.C. s. 1693l-1(a)(2)(A); and (C) does not include paper checks.
12
Hyashi, F., Sullivan, R., & Weiner, S., A Guide to the ATM and Debit Card Industry, Federal Reserve Bank of Kansas
City, 2003, pg. 13, available at: A Guide to the ATM and Debit Card Industry (kansascityfed.org) (last visited Mar. 12,
2023).
13
An “acquiring bank,” also known as the merchant bank, is a member of a card association that contracts with merchants for
the settlement of card transactions. An acquiring bank must sponsor a merchant that accepts as a form of payment card
association brand payment cards, and may contract directly with merchants or indirectly through agent banks or other third-
party organizations to process card transactions. Office of the Comptroller of the Currency, Comptroller’s Handbook: Safety
and Soundness: Merchant Processing, Vol. 1, pg. 2, Aug. 2014, available at: OCC Merchant Processing Handbook.pdf
(hereinafter cited as “OCC Merchant Processing Handbook”) (last visited Mar. 12, 2023).
14
“Payment card network” or “bank card associations” are entities that directly, or through licensed members, processors, or
agents, provides the proprietary services, infrastructure, and software that route information and data to conduct debit card or
credit card transaction authorization, clearance, and settlement, and that a person uses in order to accept as a form of payment
a brand of debit card, credit card or other device that may be used to carry out debit or credit transactions. 15 U.S.C. s.
1693o-2.(c)(11). Examples of the major payment card networks include Visa, Inc. (Visa), MasterCard, Inc. (MasterCard),
Discover Global Network (Discover), and American Express (AmEx). See Visa, What We Do, available at: What we do |
Unlocking opportunities for everyone | Visa (last visited Mar. 12, 2023); MasterCard, Who We Are, available at: About
Mastercard | Who We Are | Who We Serve (last visited Mar. 12, 2012); Discover, Our Network, available at: Our Unique
Payments Network | Discover Global Network (last visited Mar. 12, 2023); AmEx, American Express Network: The Network
That Backs You, available at; GNW-Home (americanexpress.com) (last visited Mar. 12, 2023).
15
“Issuer” or “issuing bank” is any person or entity who issues a debit card, or credit card, or the agent of such person with
respect to such card. 15 U.S.C. s. 1693o-2.(c)(9).
16
OCC Merchant Processing Handbook at pg. 1. BILL: SB 564 Page 4
Network Infrastructure, Technology, and Security
In 2006, certain major payment card networks established the PCI Security Standards Council
(PCI SSC) which created standards that set out technical requirements for their respective
compliance programs for payments made worldwide.
17
Participating organizations include
merchant, processors, developers, and point of sale vendors.
18
There are 12 requirements for
securing cardholder data that is stored, processed or transmitted by participating members, such
as encrypting transmission of cardholder data across open public networks, and developing and
maintaining secure systems and applications.
19
Payment card networks or processors are
responsible for enforcement of such requirements.
20
Authorization Process
These secured networks are used to process the authorization of credit card and debit card
transactions. Authorization is the process of approval or decline of a transaction prior to the
transaction being finalized.
21
A merchant may obtain an estimated/initial authorization to place a
hold for a transaction amount for transactions in certain types of industries when the actual
amount of a transaction is unknown.
22
Typically, authorization for a transaction to be paid by
credit card or debit card is requested electronically for the transaction amount from a merchant’s
point of sale system through the merchant’s bank or processor (via the payment card network) to
the issuer in a matter of seconds.
23
An illustration of the authorization process is shown below.
24
17
PCI SSC, About Us, available at: Official PCI Security Standards Council Site - Verify PCI Compliance, Download Data
Security and Credit Card Security Standards (hereinafter cited as “PSI SSC Governance Website”) (last visited Mar. 12,
2023).
18
PCI SSC, The Prioritized Approach to Pursue PCI DSS Compliance, pg. 2, available at: PCI DSS Prioritized Approach for
PCI DSS 3.2 (pcisecuritystandards.org) (last visited Mar. 12, 2023).
19
Id. at pgs. 1, 8-9.
20
PSI SSC Governance Website.
21
OCC Merchant Processing Handbook at pg. 7.
22
See, Visa, Authorization and Reversal Processing Requirements for Merchants, available at: Authorization and Reversal
Processing Requirements for Merchants (visa.com) (last visited Mar. 12, 2023).
23
OCC Merchant Processing Handbook at pg. 8.
24
Id. BILL: SB 564 Page 5
Clearing and Settlement Process
Clearing is the process of transmitting final transaction data from merchants to issuers for
posting to the cardholder’s account, and the calculation of certain fees and charges that apply to
the issuer and acquirer.
25
The settlement process includes transmitting sales information to the
issuing bank for collection and reimbursement of funds to the merchant, and the process of
calculating and reporting the net financial position of issuers and acquirers for all transactions
that are cleared.
26
An illustration of the clearing and settlement process is shown below.
27
25
OCC Merchant Processing Handbook at pg. 9.
26
Id.
27
Id. BILL: SB 564 Page 6
Transaction Fees
Merchants are charged network fees,
28
processor fees,
29
and interchange fees for using network
infrastructure and technology, and accepting credit card and debit cards as a form of payment for
transactions. An “interchange transaction fee” is any fee established, charged or received by a
payment card network for the purpose of compensating an issuer for its involvement in an
electronic payment transaction.
30
Payment card networks base the fees on the type or tier of the
merchant, and interchange fees includes a flat rate plus a percentage of the transaction value.
31
28
15 U.S.C. s. 1693o-2.(c)(10) defines “network fee” as a fee charged and received by a payment card network with respect
to an electronic debit transaction, other than an interchange transaction fee. These fees may also be referred to as “assessment
fees.” See Leonard, K., & Bottorff, C., Credit Card Processing Fees (2023 Guide), Forbes Advisor, Aug. 19, 2022, available
at: Credit Card Processing Fees (2023 Guide) – Forbes Advisor (hereinafter cited as “Forbes Article”) (last visited Mar. 12,
2023). 15 U.S.C. s. 1693o-2.(c)(5) defines “electronic debit transaction” as a transaction in which a person uses a debit card.
29
Forbes Article (noting that payment process fees may include monthly fees, per-transaction fees, equipment lease fees and
statement fees).
30
See 15 U.S.C. s. 1693o-2.(c)(8).
31
See Visa, The Visa System: Rates, Fees and Rules, available at: Visa USA Interchange Reimbursement Fees (last visited
Mar. 10, 2023); MasterCard, MasterCard Interchange Rates and Fees, available at: U.S. Region Interchange, 22 April 2022
(mastercard.us) (last visited Mar. 10, 2023); O’Keefe, C., Discover Interchange Rates (2023), Merchant Cost Consulting,
Jan. 8, 2023, available at: Discover Interchange Rates (2023) | Merchant Cost Consulting (last visited Mar. 10, 2023); Rej,
M., Amex Interchange Rates and Processing Fees, Merchant Cost Consulting, Sept. 16, 2022, available at: Amex Interchange
Rates and Processing Fees (2023) | Merchant Cost Consulting (last visited Mar. 10, 2023). BILL: SB 564 Page 7
Credit Card Transactions
No federal or state regulations were identified that restrict the maximum amount of interchange
fees that may be charged to a merchant for credit card transactions. The average interchange fees
for credit card transactions with major payment card networks is as follows:
Visa: 1.4% to 2.5%
MasterCard: 1.5% to 2.6%
Discover: 1.55% to 2.5%
AmEx: 2.3% to 3.5%
32
Debit Card Transactions
The Electronic Fund Transfer Act (EFTA)
33
was established with a primary objective of
individual consumer’s rights regarding the electronic fund and remittance transfer systems.
34
The
EFTA provides that an amount of any interchange transaction fee that an issuer
35
may receive or
charge with respect to an electronic debit transaction must be “reasonable and proportional to the
cost incurred by the issuer” with respect to the transaction.
36
The EFTA provides for certain
exemptions from these provisions, such as exemptions for small issuers, including issuers
37
that
have less than $10 billion in assets,
38
and exemptions for government-administered payment
programs and reloadable prepaid cards.
39
The Board of Governors of the Federal Reserve System (Board) may regulate any interchange
transaction fee that an issuer may receive or charge with respect to an electronic debit
transaction.
40
The Board must consider the following factors when issuing standards and
prescribing regulations:
The nature, type, and occurrence of fraud in electronic debit transactions;
The extent to which the occurrence of fraud depends on whether authorization in an
electronic debit transaction is based on signature, PIN, or other means;
The available and economical means by which fraud on electronic debit transactions may be
reduced;
The fraud prevention and data security costs expended by each party involved in electronic
debit transactions (including consumers, persons who accept debit cards as a form of
payment, financial institutions, retailers and payment card networks);
32
Forbes Article.
33
15 U.S.C. s. 1693 et. seq.
34
15 U.S.C. s. 1693(b); 12 C.F.R. s. 205.1(b).
35
15 U.S.C. s. 1693o-2.(c)(9) defines “issuer” as any person who issues a debit card, or credit card, or the agent of such
person with respect to such card.
36
15 U.S.C. s. 1693o-2.(a)(2); 12 C.F.R. s. 235.3(a).
37
15 U.S.C. s. 1693o-2.(a)(6)(B) limits the definition of “issuer,” for purposes of this provision, to the person holding the
asset account that is debited through an electronic debit transaction.
38
15 U.S.C. s. 1693o-2.(a)(6)(A).
39
12 C.F.R. s. 1693o-2.(a)(7) (providing that exemptions relating to certain transactions when debit and general-use prepaid
card are used by a person pursuant to a Federal, State, or local government-administered payment program).
40
15 U.S.C. s. 1693o-2.(a)(1). BILL: SB 564 Page 8
The costs of fraudulent transactions absorbed by each party involved in such transactions
(including consumers, persons who accept debit cards as a form of payment, financial
institutions, retailers and payment card networks);
The extent to which interchange transaction fees have in the past reduced or increased
incentives for parties involved in electronic debit transactions to reduce fraud on such
transactions; and
Such other factors as the Board considers appropriate.
41
The Board issued regulations which limit the amount of interchange transaction fee that an issuer
may receive or charge for any electronic debit transaction to no more than $0.21 plus 0.05
percent multiplied by the value of the transaction,
42
plus a $0.01 fraud prevention adjustment.
43
The Federal Reserve has published data on the average debit card interchange fee from 2011 to
2022, which is summarized in the table below.
44
The Board reports that Visa, MasterCard, and Discover (exempt and covered transactions)
45
have
an average debit card interchange fee per transaction of $0.36, $0.46, and $0.44, respectively,
with an interchange fee as a percentage of the average debit card transaction value of 0.76%,
0.94%, and 1.35%, respectively.
46
41
15 U.S.C. s. 1693o-2.(a)(5)(B)(ii).
42
12 C.F.R. s. 235.3(b).
43
12 C.F.R. s. 235.4(a).
44
The Board, Regulation II (Debit Card Interchange Fees and Routing): Average Debit Card Interchange Fee by Payment
Card Network, available at: Federal Reserve Board - Regulation II - Average Debit Card Interchange Fee by Payment Card
Network (last visited Mar. 10, 2023).
45
Id. (noting that covered transaction are transactions processed by issuers that are subject to the interchange fee standard
that do not qualify for an exemption).
46
Id. (providing a table of detailed BILL: SB 564 Page 9
The EFTA does not annul, alter, or affect the laws of any State
47
relating to, amongst other
things, electronic funds transfers
48
except to the extent that the laws are inconsistent with the
provisions under the EFTA, and then only to the extent of the inconsistency.
49
The Bureau of
Consumer Financial Protection may exempt from the provisions of the EFTA any class of
electronic fund transfers in State law if the Bureau determines that such law is “substantially
similar” to the EFTA and that there is adequate provision of enforcement.
50
No state laws
regulating the amount of interchange fees that may be charged to the merchant for electronic
debit transactions have been identified.
Florida Taxes
Sales and Use Tax
Florida levies a 6 percent sales and use tax on the sale
51
or rental of most tangible personal
property,
52
admissions,
53
transient rentals,
54
and a limited number of services. Chapter 212, F.S.,
contains provisions authorizing the levy and collection of Florida’s sales and use tax, as well as
47
15 U.S.C. s. 1693a.(11) defines “State” as any State, territory, or possession of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.
48
15 U.S.C. s. 1693a.(7) defines “electronic fund transfer” as any transfer of funds, other than a transaction originated by
check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, or computer
or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account. Such term includes,
but is not limited to, point-of-sale transfers, automated teller machine transactions, direct deposits or withdrawals of funds,
and transfers initiated by telephone. Such term does not include (A) any check guarantee or authorization service which does
not directly result in a debit or credit to a consumer’s account; (B) any transfer of funds, other than those processed by
automated clearinghouse, made by a financial institution on behalf of a consumer by means of a service that transfers funds
held at either Federal Reserve banks or other depository institutions and which is not designed primarily to transfer funds on
behalf of a consumer; (C) any transaction the primary purpose of which is the purchase or sale of securities or commodities
through a broker-dealer registered with or regulated by the Securities and Exchange Commission; (D) any automatic transfer
from a savings account to a demand deposit account pursuant to an agreement between a consumer and a financial institution
for the purpose of covering an overdraft or maintaining an agreed upon minimum balance in the consumer’s demand deposit
account; or (E) any transfer of funds which is initiated by a telephone conversation between a consumer and an officer or
employee of a financial institution which is not pursuant to a prearranged plan and under which periodic or recurring transfers
are not contemplated; as determined under regulation of the Bureau. 15 U.S.C. s. 1693a.(9) defines “financial institution” as a
State or National bank, a State or Federal savings and loan association, a mutual savings bank, a State or Federal credit union,
or any other person who, directly or indirectly, holds an account belonging to a consumer.
49
15 U.S.C. s. 1693q; 12 C.F.R. s. 205.12(b)(1).
50
15 U.S.C. s. 1693r; 12 C.F.R. s. 205.12(c)(1).
51
Section 212.02(15), F.S., defines “sale” as (a) any transfer of title or possession, or both, exchange
52
Section 212.05(1)(a)1.a., F.S. Section 212.02(19), F.S., defines “tangible personal property” as personal property which
may be seen, weighed, measured, or touched or is in any manner perceptible to the senses, including electric power or energy,
boats, motor vehicles and mobile homes as defined in s. 320.01(1) and (2), aircraft as defined in s. 330.27, and all other types
of vehicles.
53
Section 212.04(1)(b), F.S. Section 212.02(1), F.S., defines “admissions” as the net sum of money after deduction of any
federal taxes for admitting a person or vehicle or persons to any place of amusement, sport, or recreation or for the privilege
of entering or staying in any place of amusement, sport, or recreation, including, but not limited to, theaters, outdoor theaters,
shows, exhibits, games, races, or any place where charge is made by way of sale or tickets, gate charges, seat charges, box
charges, season pass charges, cover charges, greens fees, participation fees, entrance fees or other fees or receipts of anything
of value measured on an admission or entrance or length of stay or seat box accommodations in any place where there is any
exhibition, amusement, sport, or recreation, and all dues and fees paid to private clubs and membership clubs providing
recreational or physical fitness facilities, including, but not limited to, golf, tennis, swimming, yachting, boating athletic,
exercise, and fitness facilities, except physical fitness facilities owned or operated by any hospital licensed under ch. 395,
F.S.
54
Section 212.03(1)(a), F.S. BILL: SB 564 Page 10
the exemptions and credits applicable to certain items or uses under specified circumstances.
Sales tax is added to the price of the taxable good or service and collected from the purchaser at
the time of sale.
55
Counties are authorized to impose local discretionary sales surtaxes in addition to the state sales
tax.
56
A surtax applies to “all transactions occurring in the county which transactions are subject
to the state tax imposed on sales, use, services, rentals, admissions, and other transactions by
[ch. 212, F.S.], and communications services as defined in ch. 202.”
57
The discretionary sales
surtax is based on the tax rate imposed by the county where the taxable goods or services are
sold or delivered. Discretionary sales surtax rates currently levied vary by county in a range of
0.5 to 1.5 percent.
58
Generally, tangible personal property that is sold in an isolated or occasional sale is exempt from
the state sales tax.
59
A seller makes an isolated or occasional sale if the sale or series of sales
occurs no more than twice during any 12-month period.
60
A seller is required to register as a
dealer if he or she completes more than three sales of the same type of item during a 12-month
period. The sale of mobile homes, aircrafts, boats, and motor vehicles are expressly excluded
from the isolated or occasional state sales and use tax exemption if certain circumstances are
met.
61
According to estimates prepared by CMPSI, Revenue Estimating Conference reports suggest that
Florida sales tax revenue for FY 2020-2021 and FY 2021-2022 were $30.4 billion and $38.6
billion, respectively.
62
CMSPI estimated the interchange fees on these taxes during the same
period to be $208.5 million and $288.2 million, respectively.
63
Tourist Development Tax
64
A tourist development tax is a county tax on consideration paid on residential rentals of six
months or less.
65
The tax funds tourism-related uses specified in the authorizing statute. The
Local Option Tourist Development Act
66
authorizes counties to levy five separate taxes on
transient rental transactions. Depending on a county’s eligibility to levy such taxes, the
maximum tax rate varies from a minimum of 3 percent to a maximum of 6 percent:
55
Section 212.07(2), F.S.
56
Section 212.055, F.S.
57
Section 212.054(2)(a), F.S.
58
Office of Economic and Demographic Research, Florida Tax Handbook, 227-228 (2021), available at
http://edr.state.fl.us/Content/revenues/reports/tax-handbook/taxhandbook2021.pdf (last visited Mar. 10, 2023).
59
Fla. Admin. Code R. 12A01.037(1). See also, s. 212.02(2), defining “business” as activity engaged in by a person with the
object of private or public gain, benefit, or advantage.
60
Fla. Admin. Code R. 12A-1.037(3)(b).
61
See, s. 212.05(1)(a)1.b., and Fla. Admin. Code R. 12A-1.037(2)(a)1.
62
Email from French Brown, Attorney at Dean Mead, to Jacqueline Moody, Florida Senate Committee on Banking and
Insurance Senior Attorney, HB 677/SB 564, (Feb. 24, 2023) (on file with the Senate Committee on Banking and Insurance).
63
Id.
64
Section 125.0104, F.S.
65
Section 125.0104(3)(a)1., F.S.
66
Section 125.0104, F.S. BILL: SB 564 Page 11
The original tourist development taxes may be levied at the rate of 1 or 2 percent.
67,68
An additional 1 percent tax may be levied by counties that have previously levied a tourist
development tax at the 1 or 2 percent rate for at least three years.
69
A high tourism impact tax may be levied at an additional 1 percent.
70
A professional sports franchise facility tax may be levied up to an additional 1 percent.
71
An additional professional sports franchise facility tax no greater than 1 percent may be
imposed by a county that has already levied the professional sports franchise facility tax.
72
Prior to the authorization of the original 1 or 2 percent tourist development tax, the levy must be
approved by a countywide referendum,
73
and additional tourist development tax levies must be
authorized by a vote of the county’s governing authority or by voter approval of a countywide
referendum.
74
The original tax may be repealed by a referendum initiated by a petition signed by
15 percent of voters
75
subject to the interest of the holders of any revenue bonds repayment of
which is secured by the tax. Once the tax is in place, additional taxes may be levied by a vote of
the county commissioners.
76
III. Effect of Proposed Changes:
Section 1 of the bill creates s. 655.969, F.S., in the Financial Institutions Code that prohibits
payment card networks from charging interchange fees on tax amounts collected in electronic
payment transactions.
The bill prohibits interchange fees from being charged on tax amounts that are listed separately
on the payment invoice, sales slip, or other evidence of sale for any electronic payment
transaction. If a merchant or seller informs the payment card networks of the tax amounts at the
time of the sale, the tax amount must be deducted from the amount of the electronic payment
transaction before the interchange fee is calculated on such transaction. If the merchant does not
inform the payment card network of the amount of tax on such transaction at the time of the sale,
the payment card network must accept proof of tax amounts collected on sales after the
67
Section 125.0104(3)(c), F.S.
68
During Fiscal Year 2021-22, the 62 counties currently levying this tax will realize an estimated $445 million in revenue.
Office of Economic & Demographic Research (EDR), 2021 Local Financial Information Handbook at 255, available at
http://edr.state.fl.us/Content/local-government/reports/lgfih21.pdf (hereinafter cited as “2021 Local Financial Information
Handbook”) (last visited Mar. 10, 2023).
69
Section 125.0104(3)(d), F.S. Fifty-six of the eligible 59 counties levy this tax, with an estimated 2021-22 state fiscal year
collection of $185 million. 2021 Local Financial Information Handbook at 259.
70
Section 125.0104(3)(m), F.S. Eight of the nine eligible counties levy this tax, with an estimated 2021-22 state fiscal year
collection of $102 million. 2021 Local Financial Information Handbook at 265.
71
Section 125.0104(3)(l), F.S. Revenue can be used to pay debt service on bonds for the construction or renovation of
professional sports franchise facilities, spring training facilities or professional sports franchises, and convention centers and
to promote and advertise tourism. Forty-five of the 67 eligible counties levy this additional tax, with an estimated 2021-22
state fiscal year collection of $205 million. 2021 Local Financial Information Handbook at 263.
72
Section 125.0104(3)(n) F.S. Thirty-one of the eligible 65 counties levy the additional professional sports franchise facility
tax, with an estimated 2021-22 state fiscal year collection of $150 million. 2021 Local Financial Information Handbook at
269.
73
Section 125.0104(6), F.S.
74
Section 125.0104(3)(d), F.S.
75
Section 125.0104(6)(d), F.S.
76
Section 125.0104(3)(l), (m), and (n), F.S. BILL: SB 564 Page 12
transaction is finalized and promptly credit the merchant or seller’s settlement account. This
provision may be relied upon by smaller businesses that may not have the technology to transmit
the tax amount data electronically at the time of the sale.
A payment card network that fails to comply with the provisions under the bill is subject to a
civil penalty of up to $1,000 per violation and must refund to the merchant the amount of
interchange fees charged on the tax of an electronic payment transaction.
The following terms are defined for purposes of the section created under the bill:
“Credit card” means a card, plate, coupon book, or other credit device existing for the
purpose of obtaining money, property, labor, or services on credit.
“Debit card” means:
o A card, or other payment code or device, issued or approved for use through a payment
card network to debit an asset account, regardless of the purpose for which the account is
established, whether authorization is based on signature, personal identification number,
or other means;
o Includes a general-use prepaid card
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; and
o Excludes paper checks.
“Electronic payment transaction” means a transaction in which a person uses a debit card,
credit card, or other payment code or device, issued or approved through a payment card
network, to debit a deposit account or use a line of credit, whether authorization is based on a
signature, personal identification number, or other means.
“Interchange fee” means a fee established, charged, or received by a payment card network
for the purpose of compensating the issuer for its involvement in an electronic payment
transaction.
“Issuer” means a person, or the person’s agent, issuing a debit card or credit card.
“Payment card network” means an entity that:
o Directly or through licensed members, processors, or agents, provides the proprietary
services, infrastructure, and software that routes information and data to conduct debit
card or credit card transaction authorization, clearance, and settlement; and
o A merchant or seller uses to accept as a form of payment a brand of debit card, credit
card, or other device that may be used to carry out debit or credit transactions.
“Settlement” means the transfer of funds from a customer’s account to a seller or merchant
upon electronic submission of finalized sales transactions to the payment card network.
“Tax” means all taxes and fees levied under chs. 125 and 212, F.S.
Section 2 of the bill provides for an effective date of July 1, 2023
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15 U.S.C. s. 16931-1 defines “general-use prepaid card” to mean a card or other payment code or device issued by any
person that is (i) redeemable at multiple, unaffiliated merchants or service providers, or automated teller machines; (ii) issued
in a requested amount, whether or not that amount may, at the option of the issuer, be increased in value or reloaded if
requested by the holder; (iii) purchased or loaded on a prepaid basis; and (iv) honored, upon presentation, by merchants for
goods or services, or at automated teller machines. BILL: SB 564 Page 13
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None identified.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
To the extent that the key players in processing credit card and debit card transactions
may be required to upgrade technology and security measures to be able to transmit tax
amount data, there is an indeterminate negative fiscal impact on them. To the extent that
merchants submit tax amount data to payment card networks, there is an indeterminate
positive fiscal impact on merchants and an indeterminate negative fiscal impact on
issuing banks because of the reduced interchange fees on tax amounts for credit card and
debit card transactions.
C. Government Sector Impact:
None.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None. BILL: SB 564 Page 14
VIII. Statutes Affected:
This bill creates section 655.969 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.