Bill > S2344

This bill, effective January 1, 2027, prohibits entities involved in electronic payment transactions, such as acquirer banks, payment card networks, issuers, and processors, from charging interchange fees on the tax or gratuity portions of a transaction. Interchange fees are charges paid to the card-issuing bank for its role in processing a transaction. The bill defines "tax" as sales, use, occupancy, or excise taxes imposed by the state or local governments, and "gratuity" as a voluntary tip from a customer to an employee. To avoid these fees on taxes and gratuities, merchants must inform their acquirer bank or its designee of the tax or gratuity amount during the authorization or settlement process. If a merchant fails to do so initially, they have 180 days to submit documentation, after which the fees charged on those amounts must be refunded. The bill also makes it illegal to increase interchange fees on the non-tax and non-gratuity portions of a transaction to compensate for this prohibition, and violations can result in a $1,000 civil penalty per transaction, along with a refund of the improperly charged fees.

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