Excludes the amount of state and local taxes and fees from the amount on which an interchange fee is charged for that electronic payment transaction by a credit or debit card network; prohibits a payment card network from altering or manipulating the computation and imposition of interchange fees.
Summary
This bill amends New York’s General Business Law to create a new article governing interchange fees charged by credit and debit card networks. It requires payment card networks to exclude separately stated state and local taxes and certain fees from the transaction amount used to calculate interchange fees. The bill specifically identifies sales and use taxes, hotel and occupancy taxes, alcohol taxes, fuel and petroleum-related taxes, rental vehicle taxes, and gratuities as amounts that must not be included in the interchange-fee base.
The bill also bars payment card networks from offsetting this requirement by increasing fees on the non-tax portion of the transaction or otherwise manipulating the fee calculation to avoid the law’s effect. It requires networks either to deduct the tax or gratuity amount at settlement or to rebate the proportionate interchange fee amount, and it provides a process for merchants to submit proof of tax or fee amounts if they could not be captured at the time of sale. The law would take effect on July 1 following enactment.
Impact
The bill would add a new Article 42-A to the General Business Law and directly regulate how payment card networks calculate interchange fees in New York. Its practical effect is to reduce the fee burden on merchants for the portion of transactions attributable to taxes and gratuities, while imposing compliance obligations on card networks to adjust settlement and rebate practices. It also creates a civil penalty of up to $1,000 per violation and requires refunding improperly collected surcharges to affected merchants or sellers.
Sentiment
Based on the bill text and available context, the measure appears to have been introduced with broad sponsorship and no recorded committee transcript or vote history in the provided materials. The overall tone of the bill is consumer- and merchant-protective, aiming to prevent card networks from charging fees on amounts that are not retained by the merchant. Because no discussion snippets or votes are available, there is no documented public sentiment in the record provided, but the bill’s structure suggests support from lawmakers concerned with merchant costs and payment-card practices.
Contention
The main point of contention is likely the allocation of interchange-fee costs between merchants and payment card networks, especially whether networks should be required to exclude tax and gratuity amounts from fee calculations. The bill also anticipates resistance from networks by prohibiting them from shifting costs back onto merchants through higher rates on the remaining transaction amount. Another possible issue is administrative complexity, since the bill requires settlement-time adjustments or later proof-based rebates when tax or gratuity amounts cannot be captured at the point of sale.
Same As
Excludes the amount of state and local taxes and fees from the amount on which an interchange fee is charged for that electronic payment transaction by a credit or debit card network; prohibits a payment card network from altering or manipulating the computation and imposition of interchange fees.