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Restaurants, retailers push Maryland bill to bar swipe fees on tax and tips; banks and payment networks push back
Summary
Delegate Dana Morgan introduced HB 29 to bar card networks and issuers from charging interchange fees on the sales-tax and gratuity portions of card transactions; restaurants, retailers and convenience stores supported the idea, while banks and payments-industry groups warned of technical and legal obstacles.
Delegate Dana Morgan proposed HB 29 to stop interchange ("swipe") fees on the sales-tax and gratuity portions of card transactions. Morgan said Maryland businesses collectively paid about $156.9 million in swipe fees on sales tax in 2023 and argued the state should not let card networks collect fees on money merchants merely transmit to others.
Proponents — including the Restaurant Association of Maryland, the Maryland Retailers Alliance, convenience-store groups and local business owners — told the committee the cost of processing sales tax and tips is a substantial operating burden for small businesses. Melvin Thompson of the Restaurant Association said swipe fees are often the business’s largest expense after labor and food costs; restaurateur Anthony Clark said his group paid about $400,000 in processing fees across four Annapolis restaurants in 2024.
Industry groups and financial institutions urged caution or opposition. The Maryland Bankers Association, the Maryland and DC Credit Union Association and national payments-industry witnesses said the existing payment system is a secure, global service and that the bill would be technically difficult to implement and potentially preempted for nationally chartered banks. The bankers’ group noted a pending Illinois court case that found the payment networks’ rules are subject to challenge but also concluded national banks may be preempted under federal law.
Technology and payments experts said the underlying data to exempt tax and gratuity is present in a transaction, but argued changes would require network- and issuer-level implementation. Retailers and trade groups said processors and networks can perform the separation and that Illinois testimony shows feasibility.
Committee members questioned implementation details, possible impacts on rewards programs and whether any benefits would flow to consumers. Opponents cautioned the cost-shifting could appear elsewhere in the payments ecosystem. The hearing record shows a wide range of supporters from local business owners; bankers and payments-industry groups registered opposition and warned of operational disruption. No vote was recorded at the hearing.
