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 Rules
BILL: CS/CS/CS/SB 564
INTRODUCER: Rules Committee; Commerce and Tourism Committee; Banking and Insurance
Committee; and Senator Hutson
SUBJECT: Interchange Fees on Taxes
DATE: April 25, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Moody Knudson BI Fav/CS
2. Renner McKay CM Fav/CS
3. Moody Twogood RC Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/CS/SB 564 creates, effective October 1, 2024, s. 501.0119, F.S., which prohibits an
issuer, a payment card network, an acquirer bank, or a processor 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 informs a specified entity of such tax
amount as part of the authorization or settlement process for such transaction. The merchant
must transmit the tax amount data as part of the authorization or settlement process to avoid
being charged interchange fees on the tax amount. Section 501.0119, F.S., does not create
liability for a payment card network regarding the accuracy of the tax data reported by the
merchant.
A merchant that does not transmit the tax amount data for eligible electronic payment
transactions as part of the authorization or settlement process may submit tax documentation to
the specified entity no later than 180 days after the date of the electronic payment transaction,
and within 30 days, the issuer must credit to the merchant the amount of interchange fees
charged on the tax amount of the electronic payment transaction.
An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that
has received the tax amount data and that violates these provisions is subject to a civil penalty of
$1,000 per electronic payment transaction, and the issuer must refund the interchange fees
charged on any tax amount relative to the electronic payment transaction.
REVISED: BILL: CS/CS/CS/SB 564 Page 2
An entity, other than the merchant, involved in the facilitation or processing of an electronic
payment transaction may not distribute, exchange, transfer, disseminate, or use the data except to
facilitate the transaction or as required by law. A violation of this provision constitutes a
violation of the Florida Deceptive and Unfair Trade Practices Act (FDUPTA) which may be
enforced only by the enforcing authority and subjects the violator to sanctions and penalties
provided under the FDUPTA provisions. If such action is successful, the enforcing authority is
entitled to reasonable attorney fees and costs.
The bill defines several terms, including acquirer bank, authorization, clearance, credit card,
debit card, electronic payment transaction, interchange fee, issuer, merchant, payment card
network, processor, settlement, tax, and tax document.
The bill requires the Office of Economic and Demographic Research (EDR) to submit a report to
the President of the Senate and the speaker of the House of Representatives by January 9, 2024,
containing certain findings, policy options and impacts. EDR is authorized to contract with
specified types of entities that meet certain criteria for the sole purpose of developing some or all
of the underlying analysis and findings to be included in the reports.
See Section V. Fiscal Impact Statement.
The bill, except as otherwise provided, is effective upon becoming law.
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
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.
2
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,
3
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.
1
Section 20.121(3)(a)2., F.S.
2
Section 655.005(1)(i), F.S.
3
Section 655.012(1), F.S. BILL: CS/CS/CS/SB 564 Page 3
As of June 30, 2020, the Division of Financial Institutions regulates 197 financial institutions:
4
69 banks
66 credit unions
21 international bank offices
15 trust companies
16 family trust companies
10 qualified limited service affiliates
Payment card networks or card associations, such as Visa and MasterCard, and processors do not
meet the definition of financial institution and, therefore, are not currently regulated by the
OFR.
5
Electronic Payment Transactions
In 1958, Bank of America launched the first credit card
6
payment program with revolving credit
known as BankAmericard in the U.S.
7
In 1966, the Bank of Delaware launched the first debit
card
8
pilot program.
9
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,
10
payment card networks or
bank card associations,
11
and issuers or issuing banks.
12
Processing credit card or debit card
transactions requires several steps, including gathering sales information from the merchant,
4
The OFR, Fast Facts (2021 ed.), available at: https://flofr.gov/sitePages/documents/FastFacts.pdf (last visited April 3,
2023).
5
The OFR, Agency Analysis for SB 564 (2023), p. 2, Mar. 14, 2023 (on file with the Senate Committee on Banking and
Insurance).
6
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.
7
Visa, Inc., What We Do, available at: What we do | Unlocking opportunities for everyone | Visa (last visited April 3, 2023).
8
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.
9
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 April 3, 2023).
10
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
(hereinafter cited as “OCC Merchant Processing Handbook”) (last visited April 3, 2023).
11
“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 April 3, 2023); MasterCard, Who We Are, available at: About
Mastercard | Who We Are | Who We Serve (last visited April 3, 2012); Discover, Our Network, available at: Our Unique
Payments Network | Discover Global Network (last visited April 3, 2023); AmEx, American Express Network: The Network
That Backs You, available at; GNW-Home (americanexpress.com) (last visited April 3, 2023).
12
“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). BILL: CS/CS/CS/SB 564 Page 4
obtaining authorization for the transaction, collecting funds from the issuing bank, and making
payment to the merchant.
13
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.
14
Participating organizations include
merchants, processors, developers, and point of sale vendors.
15
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.
16
Payment card networks or processors are
responsible for enforcement of such requirements.
17
Authorization Process
These secured networks are used to process the authorization of credit card and debit card
transactions. Authorization is the process of approving or declining a transaction prior to the
transaction being finalized.
18
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.
19
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.
20
An illustration of the authorization process is shown below.
21
13
OCC Merchant Processing Handbook at pg. 1.
14
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 April 3,
2023).
15
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 April 3, 2023).
16
Id. at pgs. 1, 8-9.
17
PSI SSC Governance Website.
18
OCC Merchant Processing Handbook at pg. 7.
19
See, Visa, Authorization and Reversal Processing Requirements for Merchants, available at: Authorization and Reversal
Processing Requirements for Merchants (visa.com) (last visited April 3, 2023).
20
OCC Merchant Processing Handbook at pg. 8.
21
Id. BILL: CS/CS/CS/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.
22
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.
23
An illustration of the clearing and settlement process is shown below.
24
22
OCC Merchant Processing Handbook at pg. 9.
23
Id.
24
Id. BILL: CS/CS/CS/SB 564 Page 6
Transaction Fees
Merchants are charged network fees,
25
processor fees,
26
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.
27
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.
28
25
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 April 3,
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.
26
Forbes Article (noting that payment process fees may include monthly fees, per-transaction fees, equipment lease fees and
statement fees).
27
See 15 U.S.C. s. 1693o-2.(c)(8).
28
See Visa, The Visa System: Rates, Fees and Rules, available at: Visa USA Interchange Reimbursement Fees (last visited
April 3, 2023); MasterCard, MasterCard Interchange Rates and Fees, available at: U.S. Region Interchange, 22 April 2022
(mastercard.us) (last visited April 3, 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 April 3, 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 April 3, 2023). BILL: CS/CS/CS/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%
29
Debit Card Transactions
The Electronic Fund Transfer Act (EFTA)
30
was established with a primary objective of
individual consumer’s rights regarding the electronic fund and remittance transfer systems.
31
The
EFTA provides that an amount of any interchange transaction fee that an issuer
32
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.
33
The EFTA provides for certain
exemptions from these provisions, such as exemptions for small issuers, including issuers
34
that
have less than $10 billion in assets,
35
and exemptions for government-administered payment
programs and reloadable prepaid cards.
36
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.
37
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);
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);
29
Forbes Article.
30
15 U.S.C. s. 1693 et. seq.
31
15 U.S.C. s. 1693(b); 12 C.F.R. s. 205.1(b).
32
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.
33
15 U.S.C. s. 1693o-2.(a)(2); 12 C.F.R. s. 235.3(a).
34
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.
35
15 U.S.C. s. 1693o-2.(a)(6)(A).
36
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).
37
15 U.S.C. s. 1693o-2.(a)(1). BILL: CS/CS/CS/SB 564 Page 8
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.
38
The Board issued regulations which limit the amount of interchange transaction fees 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,
39
plus a $0.01 fraud prevention adjustment.
40
The Federal Reserve has published data on the average debit card interchange fee from 2011 to
2022, which is summarized in the table below.
41
The Board reports that Visa, MasterCard, and Discover (exempt and covered transactions)
42
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.
43
The EFTA does not annul, alter, or affect the laws of any state
44
relating to, amongst other
things, electronic funds transfers
45
except to the extent that the laws are inconsistent with the
38
15 U.S.C. s. 1693o-2.(a)(5)(B)(ii).
39
12 C.F.R. s. 235.3(b).
40
12 C.F.R. s. 235.4(a).
41
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 April 3, 2023).
42
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).
43
Id.
44
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.
45
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 BILL: CS/CS/CS/SB 564 Page 9
provisions under the EFTA, and then only to the extent of the inconsistency.
46
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.
47
No state laws
regulating the amount of interchange fees that may be charged to the merchant for electronic
debit transactions have been identified.
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.
46
15 U.S.C. s. 1693q; 12 C.F.R. s. 205.12(b)(1).
47
15 U.S.C. s. 1693r; 12 C.F.R. s. 205.12(c)(1). BILL: CS/CS/CS/SB 564 Page 10
Florida Taxes
Sales and Use Tax
Florida levies a 6 percent sales and use tax on the sale
48
or rental of most tangible personal
property,
49
admissions,
50
transient rentals,
51
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
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
and paid to the dealer
52
at the time of sale.
53
The tax amount must be separately stated on any
charge ticket, sales slip, invoice, or other tangible evidence of sale.
54
In addition to the state tax, counties may levy a local discretionary surtax, comprised of separate
surtaxes.
55
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.”
56
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.
57
48
Section 212.02(15), F.S., defines “sale” as (a) any transfer of title or possession, or both, exchange, barter, license, lease, or
rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a
consideration; (b) the rental of living quarters or sleeping or housekeeping accommodations in hotels, apartment houses or
roominghouses, or tourist or trailer camps, as hereinafter defined in ch. 212, F.S.; (c) the producing, fabricating, processing,
printing, or imprinting of tangible personal property for a consideration for consumers who furnish either directly or
indirectly the materials used in the producing, fabricating, processing, printing, or imprinting; (d) the furnishing, preparing, or
serving for a consideration of any tangible personal property for consumption on or off the premises of the person furnishing,
preparing, or serving such tangible personal property which includes the sale of meals or prepared food by an employer to his
or her employees; (e) a transaction whereby the possession of property is transferred but the seller retains title as security for
the payment of the price.
49
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.
50
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.
51
Section 212.03(1)(a), F.S.
52
Section 212.06(2), F.S., defines “dealer” to mean (a) every person who manufactures or produces tangible personal
property for sale at retail; for use, consumption, or distribution; or for storage to be used or consumed in the state, (b) every
person who imports, or causes to be imported, tangible personal property from any state or foreign country for sale at retail;
for use, consumption, or distribution; or for storage to be used or consumed in this state, (c) every person who sells at retail or
who offers for sale at retail, or who has in his or her possession for sale at retail; or for use, consumption, or distribution; or
for storage to be used or consumed in this state, tangible personal property defined herein, including a retailer who transacts a
substantial number of remote sales or a marketplace provider that has a physical presence in this state or that makes or BILL: CS/CS/CS/SB 564 Page 11
Generally, tangible personal property that is sold in an isolated or occasional sale is exempt from
the state sales tax.
58
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.
59
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.
60
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.
61
CMSPI estimated the interchange fees on these taxes during the same
period to be $208.5 million and $288.2 million, respectively.
62
facilitates through its marketplace a substantial number of remote sales, (d) any person who has sold at retail; or used, or
consumed, or distributed; or stored for use or consumption in this state, tangible personal property and who cannot prove that
the tax levied by ch. 212, F.S., has been paid on the sale at retail, the use, the consumption, the distribution, or the storage of
such tangible personal property, (e) any person who leases or rents tangible personal property for a consideration permitting
the use or possession of such property without transferring title thereto, except as expressly provided for to the contrary, (f)
any person who maintains or has within this state, directly or by a subsidiary, an office, distributing house, salesroom, or
house, warehouse, or other place of business, (g) every person who solicits business either by direct representatives, indirect
representatives, or manufacturer’s agents; by distribution of catalogs or other advertising matter; or by any other means
whatsoever, and by reason thereof receives orders for tangible personal property from consumers for use, consumption,
distribution, and storage for use or consumption in the state, (h) every person who , as a representative, agent, or solicitor of
an out-of-state principal or principals, solicits, receives, and accepts orders from consumers in the state for future delivery
and whose principal refuses to register as a dealer, (i) the state, county, municipality, and political subdivision, agency,
bureau or department, or other state or local government instrumentality, (j) any person who leases, or grants a license to use,
occupy, or enter upon, living quarters, sleeping or housekeeping accommodations in hotels, apartment houses,
roominghouses, tourist or trailer camps, real property, space or spaces in parking lots or garages for motor vehicles, docking
or storage space or spaces for boats in boat docks or marinas, or tie-down or storage space or spaces for aircraft at airports,
(k) any person who sells, provides, or performs a service taxable under ch. 212, F.S., (l) any person who solicits, offers,
provides, enters into, issues, or delivers any service warranty taxable under ch. 212, F.S., or who received, on behalf of such
person, any consideration from a service warranty holder, and (m) a forwarding agent as defined in s. 212.(5)(b)1., F.S. who
has applied for and received a Florida Certificate of Forwarding Agent Address. 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, F.S., and all other types of vehicles. Section 212.06(5)(b)1., F.S., defines “forwarding agent”
as a person or business whose principal business activity is facilitating for compensation the export of property owned by
other persons.
53
Section 212.07(2) and (3), F.S.
54
Id.
55
Section 212.055, F.S.
56
Section 212.054(2)(a), F.S.
57
Office of Economic and Demographic Research, Florida Tax Handbook, 2022 Local Discretionary Sales Surtax Rates in
Florida’s Counties, 231-232 (2022), available at http://edr.state.fl.us/content/revenues/reports/tax-
handbook/taxhandbook2022.pdf (last visited April 3, 2023).
58
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.
59
Fla. Admin. Code R. 12A-1.037(3)(b).
60
See, s. 212.05(1)(a)1.b., and Fla. Admin. Code R. 12A-1.037(2)(a)1.
61
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).
62
Id. BILL: CS/CS/CS/SB 564 Page 12
Tourist Development Tax
63
A tourist development tax is a county tax on consideration paid on residential rentals of six
months or less.
64
The tax funds tourism-related uses specified in the authorizing statute. The
Local Option Tourist Development Act
65
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:
The original TDT may be levied at the rate of 1 or 2 percent.
66
An additional 1 percent tax may be levied by counties who have previously levied the
original TDT at the 1 or 2 percent rate for at least three years.
67
A high tourism impact tax may be levied at an additional 1 percent.
68
A professional sports franchise facility tax may be levied up to an additional 1 percent.
69
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.
70
Prior to the authorization of the original 1 or 2 percent tourist development tax, the levy must be
approved by a countywide referendum,
71
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.
72
The original tax may be repealed by a referendum initiated by a petition signed by
15 percent of voters
73
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.
74
63
Section 125.0104, F.S.
64
Section 125.0104(3)(a)1., F.S.
65
Section 125.0104, F.S.
66
Section 125.0104(3)(c), F.S. All 67 of Florida’s counties are eligible to levy this tax, but only 62 counties have done so, all
at a rate of 2 percent. Office of Economic and Demographic Research (EDR), County Tax Rates: CY 2007-2023, available at
https://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Fedr.state.fl.us%2FContent%2Flocal-
government%2Fdata%2Fdata-a-to-z%2FLOTTrates.xls&wdOrigin=BROWSELINK (last visited April 3, 2023). These
counties are estimated to realize $612 million in revenue from these taxes in the 2022-2023 fiscal year. EDR 2022 Local
Government Financial Information Handbook (December 2022), p. 251, at http://edr.state.fl.us/Content/local-
government/reports/lgfih22.pdf (last visited April 3, 2023).
67
Section 125.0104(3)(d), F.S. Fifty-six of the eligible 59 counties levy this tax, with an estimated 2022-2023 state fiscal
year collection of $250 million in revenue. 2022 Local Government Financial Information Handbook at 255.
68
Section 125.0104(3)(m), F.S. All nine eligible counties levy this tax, with an estimated 2022-2023 state fiscal collection of
$162 million in revenue. 2022 Local Government Financial Information Handbook at 261.
69
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 counties levy this additional tax, with an estimated 2022-2023 state
fiscal year collection of $285 million in revenue. 2022 Local Government Financial Information Handbook at 259.
70
Section 125.0104(3)(n), F.S. Thirty-four counties levy the additional professional sports franchise facility tax, with an
estimated 2022-2023 state fiscal year collection of $17 million in revenue. 2022 Local Government Financial Information
Handbook at 265.
71
Section 125.0104(6), F.S.
72
Section 125.0104(3)(d), F.S.
73
Section 125.0104(6)(d), F.S.
74
Section 125.0104(3)(l), (m), and (n), F.S. BILL: CS/CS/CS/SB 564 Page 13
Florida Deceptive and Unfair Trade Practices Act
History and Purpose
The Florida Deceptive and Unfair Trade Practices Act (FDUTPA) became law in 1973.
75
The
FDUTPA is a consumer and business protection measure that prohibits unfair methods of
competition, unconscionable acts or practices, and unfair or deceptive acts or practices in trade or
commerce.
76
The FDUTPA is based on federal law, and s. 501.204(2), F.S., provides that it is the
intent of the Legislature that due consideration and great weight must be given to the
interpretations of the Federal Trade Commission and the federal courts relating to section 5 of
the Federal Trade Commission Act.
77
The State Attorney or the Department of Legal Affairs (“Department”) may bring actions when it
is in the public interest on behalf of consumers or governmental entities.
78
The Office of the
State Attorney may enforce violations of the FDUTPA if the violations take place in its
jurisdiction.
79
The Department has enforcement authority if the violation is multi-jurisdictional,
the state attorney defers in writing, or the state attorney fails to act within 90 days after a written
complaint is filed.
80
Remedies under the FDUTPA
The Department and the State Attorney, as enforcing authorities, may seek the following
remedies:
Declaratory judgments.
Injunctive relief.
Actual damages on behalf of consumers and businesses.
Cease and desist orders.
Civil penalties of up to $10,000 per willful violation.
81
III. Effect of Proposed Changes:
Section 1 of the bill, effective October 1, 2024, creates s. 501.0119, F.S., which prohibits an
issuer, a payment card network, an acquirer bank, or a processor from charging interchange fees
on the tax amount of an electronic payment transaction if the merchant informs the acquirer bank
or its designee of such tax amount as part of the authorization or settlement process for the
transaction. Section 501.0119, F.S., does not apply to an electronic payment transaction in which
the tax amount is not separately stated on the consumer’s payment invoice, sales slip, or other
75
Ch. 73-124, Laws of Fla.; codified at part II of ch. 501, F.S.
76
See s. 501.202, F.S. “Trade or commerce” means the advertising, soliciting, providing, offering, or distributing, whether by
sale, rental, or otherwise, of any good or service, or any property, whether tangible or intangible, or any other article,
commodity, or thing of value, wherever situated. “Trade or commerce” shall include the conduct of any trade or commerce,
however denominated, including any nonprofit or not-for-profit person or activity. See s. 501.203(8), F.S.
77
Section 501.204(2), F.S.
78
See Sections 501.203(2), 501.206, and 501.207, F.S.
79
Section 501.203(2), F.S.
80
Id.
81
Sections 501.207(1), 501.208, and 501.2075, F.S. Civil Penalties are deposited into general revenue. Section 501.2075,
F.S. Enforcing authorities may also request attorney fees and costs of investigation or litigation. Section 501.2105, F.S. BILL: CS/CS/CS/SB 564 Page 14
evidence of sale as required under s. 212.07(2), F.S., and does not create liability for a payment
card network regarding the accuracy of the tax data reported by the merchant.
A merchant must transmit the tax amount data as part of the authorization or settlement process
to avoid being charged interchange fees on the tax amount of an electronic payment transaction.
A merchant that does not transmit tax amount data on an eligible transaction as part of the
authorization or settlement process may transmit tax documentation for the transactions no later
than 180 days after the date of the electronic payment transaction and, within 30 days, the issuer
must credit to the merchant the amount of interchange fees charged on the tax amount of the
electronic payment transaction. 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
authorization process.
An issuer, a payment card network, an acquirer bank, a processor, or other designated entity that
has received the tax amount data and violates s. 501.0119, F.S., is subject to a civil penalty of
$1,000 per electronic payment transaction and the issuer must refund to the merchant the amount
of interchange fees charged on the tax of an electronic payment transaction.
Except for the merchant, an entity that is involved in facilitating or processing an electronic
payment transaction (such as an issuer, payment card network, an acquirer bank or a processor)
may not distribute, exchange, transfer, disseminate, or use the electronic payment transaction or
as required by law. An entity that violates this provision commits a violation of the FDUTPA
which may be enforced only by the enforcing authority (e.g. no individual cause of action) and
subjects the violator to the sanctions and penalties under Part II, ch. 501, F.S. If such an action is
successful, the enforcing authority is entitled to reasonable attorney fees and costs. “Enforcing
authority” is defined as the office of the state attorney if a violation of this part occurs in or
affects the judicial circuit under the office’s jurisdiction, or means the Department if the
violation occurs in or affects more than one judicial circuit or if the office of the state attorney
defers to the Department in writing, or fails to act upon a violation within 90 days after a written
complaint has been filed with the state attorney.
82
The following terms are defined for purposes of the section created under the bill:
“Acquirer bank” means a member of a payment card network which contracts with a
merchant for the settlement of electronic payment transactions. An acquirer bank may
contract directly with merchants or indirectly through a processor to process electronic
payment transactions.
“Authorization” means the process through which a merchant requests approval for an
electronic payment transaction from the issuer.
“Clearance” means the process of transmitting final transaction data from a merchant to an
issuer for posting to the cardholder’s account and the calculation of fees and charges,
including interchange fees, which apply to the issuer and merchant.
“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:
82
Section 501.203(2), F.S. BILL: CS/CS/CS/SB 564 Page 15
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
83
; 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.
“Merchant” has the same meaning as the term “dealer” in s. 212.06(2), F.S.
“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.
“Processor” means an entity that facilitates, services, processes, or manages the debit or
credit authorization, billing, transfer, payment procedures, or settlement with respect to any
electronic payment transaction.
“Settlement” means the process of transmitting sales information to the issuing bank for
collection and reimbursement of funds to the merchant and calculating and reporting the net
transaction amount to the issuer and merchant for an electronic payment transaction that is
cleared.
“Tax” means all taxes and fees levied under ch. 212, F.S., and s. 125.0104, F.S.
“Tax documentation” means documentation sufficient for the payment card network to
determine the total amount of the electronic payment transaction and the tax amount of such
transaction. Tax documentation may be related to a single electronic payment transaction or
multiple electronic payment transactions aggregated over a period of time. Examples of tax
documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax
returns filed with the Department of Revenue or local taxing authorities.
Section 2 requires the EDR to submit a report to the President of the Senate and the Speaker of
the House of Representatives by January 9, 2024, containing findings of policy options and
address the impacts of the legislation, such as the technological, financial and economic impacts
on merchants, processors, payment card networks, acquiring banks, and issuers. EDR is
authorized to contract with a public or private institution of higher learning or a nationally
83
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: CS/CS/CS/SB 564 Page 16
recognized organization or entity with experience in performing this type of evaluation for the
sole purpose of developing some or all of the analysis or findings that are required to be included
in the report.
Section 3 of the bill, except as otherwise expressly provided, is effective upon becoming law.
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:
The dormant commerce clause may bar state regulation even where there is no relevant
congressional legislation if the state regulation unduly burdens interstate commerce.
84
However, there is a high threshold for dormant commerce clause violations. The general
rule is “Where the statute regulates even-handedly to effectuate a legitimate local public
interest, and its effects on interstate commerce are only incidental, it will be upheld
unless the burden imposed on such commerce is clearly excessive in relation to the
putative local benefits.”
85
Thus, the bill would only implicate the dormant commerce
clause if a court determined that the bill creates undue burdens on interstate commerce
that clearly exceed the benefit of allowing merchants to avoid paying interchange fees on
the sales tax portion of an electronic payment transaction.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
84
Library of Congress, Art.I.S8.C3.7.1 Overview of Dormant Commerce Clause, Congress.Gov, available at: Overview of
Dormant Commerce Clause | Constitution Annotated | Congress.gov | Library of Congress (last visited Apr. 7, 2023) (citing
South Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2090-2091 (2018).
85
Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970) (citing Huron Portland Cement Co. v. City of Detroit, Michigan, 362
U.S. 440, 443 (1960)). BILL: CS/CS/CS/SB 564 Page 17
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 electronic
payment transactions.
C. To the extent that any key players are ordered to pay civil penalties or damages,
there may be an indeterminate negative fiscal impact. Government Sector
Impact:
To the extent that any specified entities are ordered to pay civil penalties, there may be an
indeterminate positive fiscal impact. Enforcement costs of the Attorney General or state
attorney may be recoverable through awards of attorney fees and costs, so long as
enforcement action is successful.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill creates section 501.0119 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS/CS/CS by Rules on April 24, 2023:
The CS requires the EDR must submit a report to the President of the Senate and the
Speaker of the House of Representatives by January 9, 2024, containing findings and
authorizes EDR to contract with a specified type of public or private institutions for the
purpose of developing some or all of the information required to be contained in the
report.
The CS makes the bill’s prohibition against applying interchange fees to the tax amount
of electronic payment transactions effective October 1, 2024, and makes the following
revisions related to that requirement:
Provides that s. 501.0119, F.S., does not create liability for a payment card network
regarding the accuracy of the tax data reported by the merchant; BILL: CS/CS/CS/SB 564 Page 18
Provides that the tax amount of an electronic payment transaction may be transmitted
to the merchant as part of the settlement process, in addition to the authorization as
provided in the bill, to avoid being charged interchange fees on such amounts;
Prohibits the specified entities who receive electronic payment transaction data from
distributing, exchanging, transferring, disseminating, or using such data except to
facilitate or process the electronic payment transaction or as required by law;
Provides that a violation of this prohibition constitutes a violation of the FDUTPA,
must only be enforced by the enforcing authority as defined in s. 501.203(2), and
subjects the violator to the sanctions and penalties as provided for in Part II of ch.
501, F.S.;
Provides that if a FDUPTA action is successful, the enforcing authority is entitled to
reasonable attorney fees and costs;
Modifies the effective date from October 1, 2023, to except as otherwise provided,
upon becoming law.
CS/CS by Commerce and Tourism on April 4, 2023:
The amendment defines the term “authorization” to mean the process through which a
merchant requests approval for an electronic payment transaction from the issuer.
The amendment prohibits certain entities from charging an interchange fee if the
merchant informs the specified entity of the tax amount as part of the authorization
process, rather than the clearance process.
CS by Banking and Insurance on March 15, 2023:
The committee substitute makes the following changes:
Moves the new section prohibiting the charge of interchange fees on taxes from s.
655.969, F.S., to s. 501.0119, F.S.;
Provides that the section does not apply to electronic payment transactions in which
the tax amount is not separately stated on the consumer’s evidence of sale;
Specifies that, in addition to a payment card network, an issuer, an acquirer bank, or a
processor may not receive or charge the merchant any interchange fees on the tax
amount of an electronic payment transaction if certain circumstances are met;
Requires the merchant to transmit the tax amount data as part of the clearance process
to avoid being charged interchange fees on the tax amount of an electronic payment
transaction;
Authorizes a merchant that does not, rather than cannot, transmit the tax amount data
as part of the clearance process to submit tax documentation for the electronic
payment transaction to the acquirer bank, its designee, or any other entity as provided
in the payment card network’s terms and conditions of service, no later than 180 days
after the date of the electronic payment transaction;
Requires the issuer, within 30 days, to credit to the merchant the amount of
interchange fees charged on the tax amount of the electronic payment transaction if
the merchant provides the tax documentation as provided under the bill;
Specifies that, in addition to a payment card network, an issuer, an acquirer bank, a
processor, or other designated entity that has received the tax amount data and BILL: CS/CS/CS/SB 564 Page 19
violates the section is subject to a civil penalty of $1,000 per electronic payment
transaction;
Specifies that when a violation occurs the issuer is the entity which must refund to the
merchant the interchange fee calculated on the tax amount relative to the electronic
payment transaction;
Amends the definition of “settlement;”
Defines the terms “acquirer bank,” “clearance,” “merchant,” “processor,” and “tax
document;” and
Amends the effective date from July 1, 2023 to October 1, 2023.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.