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Testimony for S.135: consultant and grocers back excluding taxes and tips from interchange fees; committee to seek legal advice
Summary
Witnesses urged the committee to pass S.135 language that would prevent interchange fees from applying to tax and tip amounts; witnesses and members raised implementation questions for small merchants and noted an ongoing Illinois court challenge that could affect state authority over card networks.
Dan Swanson, an attorney and consultant who has advised federal and state payment‑policy efforts, told the Senate Finance Committee that “the status quo is just unsustainable” for swipe fees and urged S.135 as a modest reform to exclude taxes and tips from the interchange fee calculation.
Swanson said the proposal would subtract tax and tip amounts from the transaction base before applying the interchange percentage set by card networks. He argued that the data required to separate tax and tip are already part of transaction flows and that processors and networks could implement the change; he also described options for…
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