House Bill 650 would create a new Article 52 in Chapter 66 of the North Carolina General Statutes to prohibit interchange fees on the sales tax portion and gratuity portion of certain electronic payment transactions. The bill applies to debit and credit card transactions processed through payment card networks and defines key terms such as issuer, acquirer bank, processor, merchant, tax, and gratuity. If a merchant identifies the tax or tip amount during authorization or settlement, the bill bars issuers, networks, acquirers, and processors from charging interchange fees on those amounts.
If the merchant does not provide the tax or gratuity amount at the time of the transaction, the bill allows the merchant to later submit tax documentation within 180 days and receive a refund of the interchange fee charged on the tax or gratuity portion within 30 days. The bill also prohibits payment card companies from shifting fees to the non-tax portion of the transaction to evade the law, and it authorizes the Attorney General to seek injunctive relief and civil penalties for violations. It further limits how transaction data may be used by nonmerchant entities and treats misuse of that data as an unfair trade practice under state law.
The bill would affect Chapter 66 by adding a new consumer/payment-card regulation governing how interchange fees are calculated on card transactions involving state or local taxes and gratuities. It would create a refund mechanism for merchants, impose enforcement authority on the Attorney General, establish a $1,000-per-transaction civil penalty, and require refunds of improperly charged fees. It also amends state law by making certain transaction-data misuse a violation of G.S. 75-1.1, thereby tying the bill to North Carolina’s unfair and deceptive trade practices framework. The law would apply prospectively to transactions on or after October 1, 2025.
The available legislative record shows no committee transcript or recorded votes, so there is no direct evidence of debate or floor sentiment in the provided materials. The bill’s referral history suggests it was still moving through the House committee process and had been re-referred to Commerce and Economic Development, Judiciary 1, and Rules. On its face, the bill appears designed to reduce merchant payment-processing costs and protect tips and tax amounts from card-network fees, which may appeal to business and hospitality interests.
The main points of potential contention are likely to be the bill’s impact on payment-card networks, issuers, acquirers, and processors, which would lose interchange revenue on tax and gratuity portions of transactions and face enforcement exposure. Another likely issue is the administrative burden on merchants, who must transmit tax or gratuity data at authorization or later provide documentation to obtain refunds. The bill also raises concerns about compliance, data handling, and whether card networks could indirectly recover lost revenue by adjusting other fees, which the bill expressly forbids. No specific opposing arguments are documented in the provided transcripts, but the structure of the bill suggests tension between merchant cost relief and payment-industry opposition.