Specifically, the act mandates that payment card networks either deduct the state and local taxes from the interchange fee calculation at the point of settlement or rebate a proportionate amount of the interchange fee attributed to the tax. By removing these tax amounts from interchange fees, the bill is designed to alleviate financial burdens on retailers, potentially fostering a healthier retail environment and improving cash flow for businesses that rely heavily on electronic transactions.
Summary
Senate Bill 2742, known as the Retailer Tax Fairness Act, aims to modify how interchange fees are calculated concerning state and local taxes for electronic payment transactions. The bill defines specific terms related to credit and debit cards while establishing that certain state and local taxes should be excluded from the amount upon which interchange fees are based. This change is intended to reduce the costs that merchants incur when processing electronic payments by ensuring that taxes do not inflate the interchange fees charged by payment networks.
Contention
The Retailer Tax Fairness Act may generate debate among stakeholders regarding its long-term implications on the retail sector and payment processing industry. Proponents argue that by ensuring interchange fees are lower for merchants, consumer prices could stabilize or decrease, thus benefiting shoppers. However, some critics may worry about the effectiveness of the proposed mechanisms to enforce compliance among payment card networks and whether the anticipated benefits will fully materialize for small businesses compared to large retailers.
Enacting the consumer inflation reduction and tax fairness act and exempting the portion of a credit card transaction constituting a tax or gratuity from assessment of the fee charged by the card issuer.
Creates the interchange fee restriction act restricting interchange fees on sales and use tax or excise tax when payment is made with a credit or debit card.
Creates the interchange fee restriction act restricting interchange fees on sales and use tax or excise tax when payment is made with a credit or debit card.