Senate committee reviews S.135 to exclude taxes and gratuities from card interchange fees, require most businesses to accept cash

Senate Finance members heard a presentation on S.135, a two-part bill that would 1) prevent card networks, issuers, acquirer banks and processors from charging interchange fees on the portion of a payment that is taxes or gratuities and 2) require merchants to accept cash for transactions of $500 or less except where statutory exemptions apply.

The bill’s drafter, Rick Sable of the Office of Legislative Council, told the committee it adds a subchapter to the consumer-protection portion of Title 9 and “we are adding a subchapter to, our consumer protection portion in title 9 of our statutes.” He explained the core mechanic: when a merchant transmits a card transaction the portion that is taxes or gratuity would be identified and exempted from the interchange-fee calculation. “If your total was, let’s say, $50, but 10 of those dollars were taxes and gratuity, that $10 will not be part of the interchange fee calculation,” Sable said.

Why it matters: merchants—especially restaurants—say card transaction fees reduce their margins. The bill attempts to reduce processing costs for…