SB 370 - HB 967
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
April 2, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
SB 370 - HB 967
SUMMARY OF BILL: Prohibits payment card networks from charging interchange fees on
any state or local taxes. Establishes a civil penalty of not more than $1,000 per violation for payment
card networks violating this Act.
FISCAL IMPACT:
NOT SIGNIFICANT
Assumptions:
• The proposed legislation will primarily impact transactions between private parties.
• It is assumed that the prohibition on charging interchange fees on state or local taxes will
not significantly impact taxable sales subject to such taxes. Therefore, any impact on state
or local tax collections will not be significant.
• Because the burden is on the merchant to file remittance gain with payment card networks,
no additional staff will be required for auditing purposes.
• Any impact to the court system is anticipated to be minimal.
• Any increase in state revenue from civil penalties is estimated to be not significant.
IMPACT TO COMMERCE:
BUSINESS IMPACT
FISCAL YEAR REVENUE
FY25-26 & Subsequent Years > $64,324,100
OTHER COMMERCE IMPACT
The extent of the increase in business revenue that will be recaptured through increased fees by
payment card networks is based on multiple unknown variables and cannot be quantified with
reasonable certainty.
SB 370 - HB 967 2
Assumptions:
• According to a 2025 Nilson Report, Visa and MasterCard accounted for 86.95 percent of
credit and debit card purchases in the United States in 2024.
• According to Visa and MasterCard’s annual reports, they combined a total of
$29,781,000,000 in United States transaction fee revenue. Assuming a proportional share of
transaction fee revenue to the credit and debit card purchases, the total amount is estimated
to be $34,250,718,804 ($29,781,000,000 / 86.95%).
• Based on information published by the United States Census Bureau, Tennessee represents
approximately 2.13 percent of the United States population. It is therefore estimated that
the amount of transaction fees attributable to Tennessee is equal to $729,540,311
($34,250,718,804 x 2.13%).
• The current state sales tax rate is 7.0 percent; the average local option sales tax rate is
estimated to be 2.5 percent, for a combined average sales tax rate of 9.5 percent. The
portion of interchange fees collected from the imposition of such fees on state and local
sales is estimated to be 8.68 percent [(0.095 / (1 + 0.095)].
• Therefore, the increase in business revenue for Tennessee merchants as a result of the
proposed legislation is estimated to be $63,324,099 ($729,540,311 x 8.68%). Such increase
represents savings from interchange fees that are currently imposed on state and local sales
and use taxes.
• Additional interchange fees imposed on taxes other than the sales and use tax, which will
now be exempt from such charges, are reasonably estimated to make up at least $1,000,000
of fee revenue.
• The total increase in business revenue for Tennessee businesses is estimated to exceed
$64,324,099 ($63,324,099 + $1,000,000) beginning in FY25-26.
• Visa, Mastercard, American Express, Discover, and other payment card networks whose
headquarters are not in Tennessee make up the vast majority of networks imposing
transactions fees. Therefore, it is estimated that the equivalent decrease in revenue will be
realized by out-of-state businesses; any decrease in revenue to Tennessee businesses will be
not significant.
• Payment card networks could increase interchange fees to recapture some or all of the
estimated loss of revenue. Due to multiple unknown variables, any such amount cannot be
quantified with reasonable certainty.
• Any impact on jobs in this state is estimated to be not significant.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director