What's Happening?
The Pennsylvania House Finance Committee has advanced House Bill 2090, a legislative proposal aimed at providing relief to retailers from interchange fees charged on the sales tax portion of credit card transactions. This bill, supported by the Pennsylvania Food Merchants Association (PFMA), seeks to alleviate the financial burden on food retailers and convenience stores, which often operate on thin profit margins. Currently, retailers are required to pay swipe fees on the entire transaction amount, including sales tax, which they collect for the state. The proposed legislation would prevent card networks from imposing these fees on the sales tax portion, offering some financial relief to high-volume, card-dependent retailers. The bill also
includes provisions to protect merchants in disputed transactions and reinforces their ability to engage in lawful pricing practices.
Why It's Important?
This legislative move is significant as it addresses a long-standing issue faced by retailers, particularly those in the food and convenience store sectors. By exempting sales tax from interchange fees, the bill could reduce overall payment acceptance costs, which is crucial for businesses with high transaction volumes. The bill also highlights the broader issue of limited competition in the credit card marketplace, dominated by Visa and Mastercard. While the bill does not overhaul the payment system, it represents a step towards more equitable fee structures for retailers. The outcome of this legislation could influence similar efforts in other states and potentially impact national discussions on credit card fee reforms.
What's Next?
The advancement of House Bill 2090 is a step forward in the legislative process, but it is not yet law. The PFMA plans to continue working with lawmakers to push the bill through the Pennsylvania House. Meanwhile, other states like Illinois have already enacted similar measures, and states such as North Carolina, Connecticut, California, New York, and Arizona are considering similar legislation. At the federal level, the Credit Card Competition Act remains a focal point for retailers seeking broader reforms. The outcome of Pennsylvania's bill could serve as a model for other states and influence national policy discussions.
