States Propose Bills to Limit Interchange Fees
As we move into the New Year and state legislatures come back into session, we are on the look-out for new bills that may impact clients in the banking and financial services market.
Three states – Oklahoma, Mississippi, and Tennessee – have recently proposed bills that, if passed, would have major repercussions on the financial services industry.
Specifically, the bills proposed in each of the three states would require that state and local taxes and fees be excluded from the calculation of interchange fees for a card transaction. These fees are included as part of the calculation of interchange fees today and a change to this process would require, among other things, the creation and implementation of new technology throughout the electronic payments value chain. Implementing such changes would be extremely costly to banks who would likely look to merchants to shoulder a significant part of the burden. Merchants shouldering this burden may, in turn, attempt to offset these costs by passing them onto consumers or, in some cases, by ceasing to accept card payment methods altogether.
In light of these negative consequences, companies in the financial services space should keep an eye on the Tennessee, Mississippi, and Oklahoma bills and also be wary for any similar proposals in other states.
Copies of the bills can be found below.
- HB 2181 – http://webserver1.lsb.state.ok.us/cf_pdf/2021-22%20INT/hB/HB2181%20INT.PDF
- SB 798 – http://webserver1.lsb.state.ok.us/cf_pdf/2021-22%20INT/SB/SB798%20INT.PDF