House Finance Committee reports bill to bar card-network fees on sales-tax portion of transactions

The House Finance Committee voted to report House Bill 2090, which would prohibit card networks from charging interchange fees on the sales-tax portion of retail transactions, after extended testimony from payment-industry experts and hours of member questions.

Supporters framed the bill as a narrow, practical reform. Dan Swanson, an attorney for the Merchants Payments Coalition, told the committee that the bill only targets the sales-tax portion of transactions and said states can require networks to exclude sales taxes when setting percentage-based interchange fees. "It would take 312,000,000 per year out of the Commonwealth," Swanson said, referring to his estimate of swipe fees assessed on sales taxes in 2023. He outlined several compliance options for networks, including changing fee formulas away from percentage-based rates, subtracting sales tax from transaction totals when merchants transmit that data, issuing prompt rebates or credits, batching tax data for post-transaction adjustments, or moving to a regular billing cycle for merchant fees.

Opponents cautioned that the bill could create wide operational and compliance challenges, particularly for smaller merchants. Deb Peters, a certified public accountant and subject-matter expert for the Electronic Payments Coalition, told the committee the payment ecosystem transmits only a single transaction amount through networks and "networks and banks have no idea what you purchase and how much of that was taxable or not taxable." She warned that without reliable transaction-level tax data, networks could refuse to process transactions that include sales tax or that merchants would face software and contractual upgrades to comply, which could be costly. "This bill is fundamentally flawed on a variety of reasons," Peters said, arguing it could leave small merchants struggling to accept cards.

Lawmakers pressed both witnesses on legal and technical risks. Representative Dallas Kephart cited an Illinois federal-district preliminary injunction in litigation over a similar law and asked whether federal preemption under banking statutes would limit a state law. Swanson said differences in enforcement targets (networks versus banks) distinguish HB 2090 from the Illinois litigation and noted courts at the preliminary stage had suggested states can regulate nonbank payment card networks.

Several committee members stressed the bill's limited scope while voicing concerns. Representative Tom Kutz and Representative Fritz said the measure was a piecemeal solution that could disadvantage community banks and place compliance burdens on small retailers; Representative Keith Harris raised equity concerns, saying fees disproportionately affect low-income consumers and SNAP/EBT users.

The committee proceeded to a roll call and reported the bill by a committee vote recorded in the transcript as "14 yes and 12 no." The committee record shows the bill will move on for further consideration in the House.

What comes next: Because the committee "reported" the bill, House leadership will determine whether and when HB 2090 receives floor consideration. Any legal risks identified during debate — including pending litigation in other states — would remain open to challenge if the bill becomes law.