Kansas House Bill HB2089

Kansas 2025-2026 Regular Session

• Introduced: 1/23/25
• Refer: 1/23/25

Caption

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.

Summary

HB 2089 creates the “consumer inflation reduction and tax fairness act” and limits interchange fees on the tax and gratuity portions of electronic payment transactions. In practical terms, when a merchant accepts a credit or debit card payment and separately identifies the amount attributable to sales tax or a tip, the issuer, payment card network, acquirer bank, or processor would be prohibited from charging interchange fees on those identified amounts. The bill also allows merchants to recover improperly charged fees later by submitting tax documentation within 180 days if the tax or gratuity amount was not transmitted during authorization or settlement. The bill defines a wide range of payment-processing terms, including issuer, acquirer bank, processor, payment card network, interchange fee, tax, gratuity, and electronic payment transaction. It applies to taxes collected and remitted by merchants in connection with card transactions, with exclusions for certain state taxes such as income tax and some financial institution and insurance taxes. The measure also creates enforcement mechanisms, including civil penalties, refunds of unlawful fees, and authority for the attorney general or county/district attorneys to seek injunctions and recover expenses.

Impact

HB 2089 would change Kansas law by prohibiting interchange fees on the tax and gratuity portions of card transactions when those amounts are properly identified, and by requiring refunds of such fees if merchants later provide documentation. It would create new statutory duties for issuers, payment card networks, acquirer banks, and processors, while giving merchants a cause of action and giving state and local prosecutors enforcement authority. The bill could reduce payment-processing costs for merchants on taxable and tipped sales, while shifting compliance obligations to card networks and financial intermediaries.

Sentiment

The available context suggests the bill is generally favorable to merchants and small businesses, as it was requested on behalf of the National Federation of Independent Business and is framed as consumer inflation reduction and tax fairness legislation. The title and structure indicate support for preventing fees on amounts that are not retained by merchants, which is likely to be viewed positively by retailers and service businesses that process many card transactions. No committee transcript or vote data is available here, so there is no recorded public debate or formal vote history to indicate broader legislative sentiment.

Contention

The main point of contention is likely the bill’s effect on payment card networks, issuers, acquirer banks, and processors, which would lose fee revenue on tax and gratuity amounts and face new compliance and refund obligations. Another likely issue is administrative complexity: merchants must separately transmit tax or gratuity data or later provide documentation, and disputes could arise over accuracy, timing, and whether fees were improperly calculated. The enforcement provisions, including civil penalties of up to $1,000 per transaction and attorney general or county/district attorney authority, may also be seen as significant and potentially burdensome by the payments industry.