Prohibits credit and debit card interchange fees in certain circumstances.
Summary
Senate Bill 4160 would regulate how payment card networks calculate interchange fees on credit and debit card transactions in New Jersey. The bill generally prohibits interchange fees that are based on the full gross amount of a transaction when that amount includes sales tax or gratuity, and it bars networks from shifting fees in a way that would effectively circumvent that prohibition. It also adds a separate restriction for certain eligible political or charitable contributions paid by card, capping interchange fees at 0.2% for debit card contributions and 0.3% for credit card contributions when those fees are based on prior issuer practices.
To comply with the bill, a payment card network would have to either exclude tax and gratuity from the interchange-fee calculation at settlement or rebate the merchant the portion of the fee attributable to tax or gratuity within 30 days. If a merchant cannot transmit tax information at settlement, the merchant may later document the tax or gratuity amount and receive a corresponding credit. The bill takes effect 180 days after enactment and authorizes the Attorney General to take anticipatory action to implement it.
Impact
The bill would supplement New Jersey’s consumer fraud and related commercial statutes by creating new state-level rules governing payment card network fee practices. It would directly affect payment card networks, issuers, acquirer banks, processors, and merchants that accept debit and credit card payments and collect taxes, including transactions involving sales tax, motor fuel tax, and other specified taxes, as well as gratuities. It also creates a new enforcement framework with civil penalties of up to $1,000 per violation, fee refunds, and Attorney General authority to seek injunctive relief and restitution.
Sentiment
No committee transcripts or recorded votes were provided, so there is no documented debate or formal vote history to gauge legislative sentiment. Based on the bill text and sponsor statement alone, the measure appears to be framed as a consumer- and merchant-protection bill aimed at preventing card networks from charging fees on amounts that are not part of the merchant’s revenue, such as taxes and tips. The overall tone of the proposal is regulatory and corrective rather than expansive.
Contention
The main points of contention likely involve the practical and financial impact on payment card networks, issuers, and processors, who would need to change fee calculations and settlement systems to exclude taxes and gratuities or issue rebates after settlement. Merchants may support the measure because it reduces fees on pass-through amounts, but implementation could be disputed where tax information is not captured at the point of sale or where post-settlement documentation is required. The separate cap on interchange fees for eligible contributions may also raise questions about how broadly the contribution provision applies and whether it affects political fundraising or charitable giving systems.