Vermont bill would bar card processors from charging swipe fees on taxes, tips

The Vermont House Committee on Commerce and Economic Development heard testimony Friday, April 4, 2025, on H.317, a bill sponsored by Representative Casey that would prohibit payment processors from charging interchange (commonly called "swipe") fees on the portions of electronic card transactions that are taxes or gratuities.

Representative Casey, sponsor of H.317 and a member of the committee, told lawmakers the bill is targeted at fees charged on amounts that businesses do not retain. "If you're processing a transaction, you shouldn't be charging a fee on the portion that's tax or gratuity," Casey said, adding that taxes are passed straight through to the state and gratuities go to employees.

The bill does not seek to eliminate swipe fees on purchase amounts, Casey said. "The bill does not eliminate swipe fees altogether. It only addresses what I think would be the unfair portion of this," Casey said, and that the draft includes enforcement provisions and a civil remedy to encourage compliance.

Casey framed the proposal as a modest relief for small businesses operating on thin margins. She said merchants in her Montpelier district and around the state reported that fees on tax and tip totals are "a nickel and dime practice that really adds up quick" and that even modest savings could affect staffing and survival.

A committee member who identified themself as a merchant spoke in support: "As a person who takes credit cards as a merchant, I very much love this idea," the commenter said. Committee members asked whether the bill would apply only to credit cards or also to debit cards; Casey said she believed it would include debit cards as well but that she would need to "search through the system" to confirm the technical scope.

Committee counsel was not recorded providing a statutory citation during the discussion, and no vote or formal committee action was recorded in the transcript. Casey said she and supporters would work with committee staff and counsel on the bill's technical and enforcement language as the measure moves forward.

Background: Representative Casey said people in Montpelier and other districts reported losses from fees on taxes and gratuities and that H.317 aims to give merchants flexibility to report those amounts either up front or retroactively depending on their payment systems. The sponsor also said she believes the measure would be among the first of its kind if enacted.

Next steps were not specified in the transcript; the exchange recorded was an introductory presentation and initial questions rather than a committee vote.