Creates the interchange fee restriction act restricting interchange fees on sales and use tax or excise tax when payment is made with a credit or debit card.
Summary
S0768 creates the “Interchange Fee Restriction Act” in Rhode Island’s commercial law chapter. The bill prohibits an issuer, payment card network, acquirer bank, or processor from charging interchange fees on the tax portion of an electronic payment transaction when a merchant identifies the tax amount during authorization or settlement. It applies to transactions made with credit cards, debit cards, and similar payment devices, and defines the key participants and terms used in card-payment processing.
If a merchant does not provide the tax 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 interchange fees charged on the tax portion within 30 days after submission. The bill also bars payment card entities from shifting fees to the non-tax portion of the transaction to evade the restriction, and it makes violations a deceptive trade practice subject to civil penalties of up to $1,000 per violating transaction, along with a refund obligation for the improperly charged fee.
Impact
The bill would add a new chapter to Title 6 of the Rhode Island General Laws and directly regulate how interchange fees are assessed on card transactions involving state or municipal sales and use taxes or excise taxes. It would affect merchants that collect and remit taxes, as well as card issuers, payment card networks, acquirer banks, and processors that participate in electronic payment transactions. The measure creates a statutory refund process for tax-related interchange fees and establishes enforcement through Rhode Island’s deceptive trade practices law.
Sentiment
Based on the bill text and available context, the measure appears to be framed as a consumer- and merchant-relief proposal aimed at preventing fees from being charged on tax amounts that merchants merely collect and remit. There is no recorded committee transcript or vote history in the provided materials, so there is no documented public debate or formal sentiment from hearings or floor action. The overall tone of the bill itself is regulatory and protective of merchants with respect to tax pass-through amounts.
Contention
The main policy issue is whether payment card companies should be allowed to collect interchange fees on the tax portion of a transaction, especially when merchants are acting as tax collectors for the state or municipalities. Potential points of contention include the administrative burden on merchants to transmit tax data or later submit documentation, the compliance and systems costs for issuers and networks, and the bill’s anti-circumvention language that prevents shifting fees to the non-tax portion of a transaction. No specific opposing or supporting stakeholders are identified in the provided record, and no committee testimony is available.
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.