Electronic Payment Transactions - Interchange Fees - Calculation and Use of Data
Summary
HB29 would change Maryland law governing electronic payment transactions, especially how interchange fees are calculated when a purchase includes sales tax or gratuity. The bill requires issuers, payment card networks, acquirer banks, and processors to exclude the tax and gratuity portion of a transaction from the fee base when a merchant provides specified documentation. If a merchant cannot provide the documentation at the time of authorization or settlement, the bill allows submission within 180 days, after which the issuer must credit back the interchange fees charged on the tax and gratuity portion within 30 days.
The bill also prohibits payment card networks and related entities from increasing interchange fees on the non-tax, non-gratuity portion of a transaction in response to a merchant’s request to exclude tax and gratuity amounts. In addition, it restricts the use of electronic payment transaction data by non-merchants, allowing use only for processing the transaction, fraud prevention, loyalty or promotional offerings, tailoring products and services, or as otherwise required by law. Violations of the data-use restrictions are treated as unfair, abusive, or deceptive trade practices under Maryland’s Consumer Protection Act.
Impact
HB29 amends Commercial Law Article provisions on merchant processing agreements and adds a new section governing interchange fee calculations and electronic payment transaction data use. It creates new obligations for card issuers, payment card networks, acquirer banks, and processors, while giving merchants a statutory mechanism to seek reimbursement for interchange fees charged on sales tax and gratuities. It also adds a new Consumer Protection Act predicate offense for violations of the data-use restrictions, exposing violators to enforcement and penalties under Title 13.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the measure appears to be a targeted consumer-and-merchant protection bill with a pro-business/merchant orientation. Its stated purpose suggests support for reducing fees on amounts merchants merely collect and remit to the state or pass through as gratuities. No contrary testimony, amendments, or vote history is provided here, so there is no documented opposition or support to characterize beyond the bill’s apparent policy direction.
Contention
The main points of potential contention are likely to be who bears the administrative burden of documenting tax and gratuity amounts, whether issuers and networks can reliably verify those amounts, and whether the bill’s fee-reimbursement and anti-retaliation provisions could affect card-network pricing models. Another likely issue is the data-use restriction, which limits how transaction data may be shared or repurposed and could draw concern from payment processors, networks, and businesses that rely on analytics or marketing uses. The bill also imposes civil penalties of $1,000 per transaction for noncompliance, which may be viewed as significant by affected financial entities.