Rhode Island Senate Bill S0842

Rhode Island 2025 Regular Session

• Introduced: 3/19/25
• Refer: 3/19/25

Caption

Prohibits the charging of interchange fees on taxes and gratuities.

Impact

The enactment of S0842 is expected to notably affect commercial practices surrounding electronic transactions in the state. By eliminating interchange fees on taxes and gratuities, the bill seeks to benefit a wide range of businesses, especially those heavily reliant on payment cards, such as restaurants and service providers. These changes aim to streamline transaction processes and ensure that consumers are not penalized through inflated costs associated with these payments, thus protecting the interests of both merchants and patrons alike.

Summary

Bill S0842 introduces significant changes to the treatment of interchange fees associated with electronic payment transactions concerning taxes and gratuities. Specifically, the bill prohibits any payment card network from charging interchange fees on the portion of a transaction that is allocated to taxes or gratuities. It mandates that merchants must inform their acquirer banks of these amounts during the transaction authorization or settlement process to avoid incurring such fees. The legislation intends to provide financial relief to merchants who process these payments, ultimately reducing operating costs and enhancing their profitability.

Contention

A potential point of contention regarding bill S0842 lies in its implications for payment card networks and financial institutions. Critics may argue that this prohibition on interchange fees could disrupt established practices within the payments industry, potentially leading to hikes in fees on other transaction components. Furthermore, the bill explicitly disallows any attempts to manipulate interchange fee structures to bypass the prohibition, indicating a long-term oversight on compliance that could evoke further industry debate on regulatory impacts. The success of this initiative will depend on careful monitoring of compliance and enforcement mechanisms to ensure fair advantages for all parties involved.