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Restaurants, hospitality and trade groups press lawmakers to limit swipe fees on taxes and tips
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Summary
Restaurant and hospitality groups urged passage of H-7607 to stop percentage‑based interchange fees from being applied to sales tax and employee tips; payments-industry witnesses warned of technical complexity, legal risk and possible unintended consequences.
Supporters including the Rhode Island Hospitality Association, the National Restaurant Association and numerous small restaurant owners told the House Corporations Committee that House Bill 7,607 would deliver meaningful savings to thin-margin businesses by preventing card networks from applying percentage‑based interchange fees to the portions of a transaction that are sales tax or gratuity.
Ryan Mooten of the Rhode Island Hospitality Association told the committee that, for several representative businesses, the proposal would translate to thousands of dollars in annual savings and allow reinvestment in staff and facilities. "We are not asking for a handout. We are asking not to be charged for handling someone else's money," he said.
Dan Swanson, a payments-policy expert, explained that interchange fees are centrally scheduled by card networks and that the bill would require networks to exclude tax and tip when calculating percentage based fees or to rebate fees retroactively. He referenced Illinois' 2024 law and recent federal court activity addressing preemption arguments and said state action is feasible.
Opponents, including the Electronic Payments Coalition and payment‑industry witnesses, countered the technical change is more complicated than advocates say because several intermediaries and banks share in the fee flow; they warned a state‑by‑state patchwork risks incompatibilities. "The global payment network is vast and complicated," the Electronic Payments Coalition's witness said, urging education and compromise.
Unionized breweries, convenience stores and other small‑business groups added testimony supporting the bill. Committee members questioned practical implementation, differential rates for debit versus credit, and asked whether the savings would necessarily reach customers; witnesses said lower merchant costs could translate into lower prices, better wages or reinvestment, though no enforceable pass‑through mechanism was proposed at the hearing.
No substantive committee action was taken beyond holding the bills for further study; stakeholders offered to continue technical discussions to narrow definitions and compliance paths.
