2025 -- S 0842
========
LC001640
========
S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2025
____________
A N A C T
RELATING TO COMMERCI AL LAW -- GENERAL REGULATORY PROVISION S --
INTERCHANGE FEES
Introduced By: Senators Felag, Sosnowski, Bissaillon, Britto, Dimitri, DiMario, and
Tikoian
Date Introduced: March 19, 2025
Referred To: Senate Commerce
It is enacted by the General Assembly as follows:
SECTION 1. Title 6 of the General Laws entitled "COMMERCIAL LAW — GENERAL 1
REGULATORY PROVISIONS" is hereby amended by adding thereto the following chapter: 2
CHAPTER 26.2 3
INTERCHANGE FEES 4
6-26.2-1. Definitions. 5
(a) As used in this chapter. the following words and terms shall have the following 6
meanings: 7
(1) "Acquirer bank" means a member of a payment card network that contracts with a 8
merchant for the settlement of electronic payment transactions. An acquirer bank may contract 9
directly with merchants or indirectly through a processor to process electronic payment 10
transactions. 11
(2) "Authorization" means the process through which a merchant requests approval for an 12
electronic payment transaction from the issuer. 13
(3) "Clearance" means the process of transmitting final transaction data from a merchant 14
to an issuer for posting to the cardholder's account and the calculation of fees and charges, including 15
interchange fees, that apply to the issuer and the merchant. 16
(4) "Credit card" means a card, plate, coupon book, or other credit device existing for the 17
purpose of obtaining money, property, labor, or services on credit. 18
LC001640 - Page 2 of 5
(5) "Debit card" means a card or other payment code or device issued or approved for use 1
through a payment card network to debit an asset account, regardless of the purpose for which the 2
account is established, whether authorization is based on a signature, a personal identification 3
number, or other means. "Debit card" includes a general use prepaid card, as defined in 15 U.S.C. 4
§ 16931-I. "Debit card" does not include paper checks. 5
(6) "Electronic payment transaction" means a transaction in which a person uses a debit 6
card, a credit card, or other payment code or device issued or approved through a payment card 7
network to debit a deposit account or use a line of credit, whether authorization is based on a 8
signature, a personal identification number or other means. 9
(7) "Gratuity" means a voluntary monetary contribution to an employee from a guest, 10
patron, or customer in connection with services rendered. 11
(8) "Interchange fee" means a fee established, charged, or received by a payment card 12
network for the purpose of compensating the issuer for its involvement in an electronic payment 13
transaction. 14
(9) "Issuer" means a person issuing a debit card or credit card or the issuer's agent. 15
(10) "Merchant" means a person that collects and remits a tax. 16
(11) "Payment card network" means an entity that: 17
(i) Directly or through licensed members, processors, or agents, provides the proprietary 18
services, infrastructure, and software to route information and data for the purpose of conducting 19
electronic payment transaction authorization clearance and settlement; and 20
(ii) A merchant uses to accept as a form of payment a brand of debit card, credit card, or 21
other device that may be used to carry out electronic payment transactions. 22
(12) "Person" means any individual, firm, public or private corporation, government, 23
partnership, association, or any other organization or entity. 24
(13) "Processor" means an entity that facilitates, services, processes, or manages the debit 25
or credit authorization, billing, payment procedures, or settlement with respect to any electronic 26
payment transaction. 27
(14) "Settlement" means the process of transmitting sales information to the issuing bank 28
for collection and reimbursement of funds to the merchant and calculating and reporting the net 29
transaction amount to the issuer and merchant for an electronic payment transaction that is cleared. 30
(15) "Tax" means any sales, use, occupancy, or excise tax imposed by the state or a political 31
subdivision thereof. 32
(16) "Tax and gratuity documentation" means documentation sufficient or data sufficient 33
for the payment card network to determine the total amount of the electronic payment transaction 34
LC001640 - Page 3 of 5
and the tax or gratuity amount of the transaction. It may be related to a single electronic payment 1
transaction or multiple electronic payment transactions aggregated over a period of time to include, 2
but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the department 3
of revenue or local taxing authority. 4
6-26.2-2. Interchange fees on taxes and gratuities prohibited. 5
(a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive 6
or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment 7
transaction if a merchant informs the acquirer bank or its designee of the tax or gratuity amount as 8
part of the authorization or settlement process for the electronic payment transaction. The merchant 9
shall transmit the tax or gratuity amount data as part of the authorization or settlement process to 10
avoid being charged interchange fees on the tax or gratuity amount of an electronic payment 11
transaction. 12
(b) A merchant that does not transmit the tax or gratuity amount data in accordance with 13
this section may submit tax and gratuity documentation for the electronic payment transaction to 14
the acquirer bank or its designee no later than one hundred eighty (180) days after the date of the 15
electronic payment transaction, and, within thirty (30) days after the merchant submits the 16
necessary tax and gratuity documentation, the issuer or a payment card network shall credit to the 17
merchant the amount of interchange fees charged on the tax or gratuity amount of the electronic 18
payment transaction. 19
(c) This section shall not create liability for a payment card network regarding the accuracy 20
of the tax or gratuity data reported by the merchant. 21
(d) It shall be unlawful for an issuer, a payment card network, an acquirer bank, or a 22
processor to alter or manipulate the computation and imposition of interchange fees by increasing 23
the rate or amount of the fees applicable to or imposed upon the portion of a credit or debit card 24
transaction not attributable to taxes or gratuities to circumvent the provisions of this section. 25
6-26.2-3. Penalties. 26
An issuer, a payment card network, an acquirer bank, a processor, or other designated entity 27
that has received the tax or amount data and violates the provisions of this chapter shall be subject 28
to a civil penalty of one thousand dollars ($1,000) per electronic payment transaction conducted in 29
violation of this chapter, and the issuer or payment card network shall refund the merchant the 30
interchange fee calculated on the tax or gratuity amount relative to the electronic payment 31
transaction. 32
6-26.2-4. Severability. 33
If any of the provisions of this chapter are held invalid, the remainder shall not be affected 34
LC001640 - Page 4 of 5
as a result, nor shall the application of the provision held invalid to persons or circumstances other 1
than those as to which it is held invalid be affected as a result. 2
SECTION 2. This act shall take effect on January 1, 2026. 3
========
LC001640
========
LC001640 - Page 5 of 5
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO COMMERCI AL LAW -- GENERAL REGULATORY PROVISIONS --
INTERCHANGE FEES
***
This act would prohibit the charging of interchange fees on taxes and gratuities. 1
This act would take effect on January 1, 2026. 2
========
LC001640
========