Fair Swipe Act of 2025

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February 24, 2025

Nyasha Howard
Secretary to the Council
Council of the District of Columbia
1350 Pennsylvania Avenue, NW
Washington, D.C. 20004

Dear Secretary Howard:

Today, I am introducing the “Fair Swipe Act of 2025”, along with Councilmembers Anita Bonds,
Wendell Felder, Matthew Frumin, Christina Henderson, Janeese Lewis George, Brianne K.
Nadeau, Brooke Pi nto, and Robert C. White, Jr . Please find enclosed a signed copy of the
legislation.

Restaurants and eateries, large and small, and other local business retailers are the cornerstones
of our communities and an engine of our economy. According to the National Restaurant
Association, in 2024, the restaurant industry exceeded $1.1 trillion in sales and remitted $216.7
billion in taxes for all levels of government. However, providing this tax collection service for
jurisdictions comes at a high cost for business owners because when a consumer decides to pay
their bill with either their debit or credit card, the debit or credit card network charges an
interchange fee (also known as a “swipe fee”) for the transaction. A swipe fee, which averages 2-
4% per transaction, is also charged on the tax and tips portion of the bill , even though the
business never pockets that money and passes the taxes and tips portion on to th e jurisdiction
or employee. A swipe fee on the sales and tax portions of a bill unfairly eats into the hard-earned
profits of our local business retaile rs and should stay in their pockets so that they can continue
to grow their businesses.

This bill would prohibit the charging of interchange fees on the sales tax and gratuity portions of
credit and debit card transaction s. It also outlines the process by which a merchant can submit
tax and gratuity documentation and receive credits for the amount of interchange fees charged
per electronic payment transaction. For violations of the prohibitions created in this bill, it would
impose a civil penalty of $1,000 per electronic payment transaction . Finally, the bill includes a
non-severability clause, thereby ensuring key provisions do not solely burden District- chartered
banks should the legislation be challenged in court.
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This legislation would allow the District to ensure that all merchants can keep their hard-earned
profits in their pockets by recovering these fees either at the point of sale or through retroactive
reimbursement by a financial institution . This is a step toward ensuring our local businesses
continue to have a fair shot at post-pandemic recovery and can thrive in an environment that
recognizes their challenges and creates opportunities for owners/operators and workers to
succeed.

Sincerely,

Councilmember Charles Allen, Ward 6
Chairperson, Committee on Transportation & the Environment

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___________________________ ______________________________ 1
Councilmember Anita Bonds Councilmember Charles Allen 2
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Councilmember Wendell Felder Councilmember Matthew Frumin 6
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Councilmember Christina Henderson Councilmember Janeese Lewis George 10
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Councilmember Brianne K. Nadeau Councilmember Brooke Pinto 14
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Councilmember Robert C. White, Jr. 18
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A BILL 22
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IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 27
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To prohibit the charging of interchange fees on the sales tax and gratuity portions of credit and 32
debit card transactions, to outline the process by which a merchant can submit tax and 33
gratuity documentation and receive a credit for the amount of interchange fees charged 34
per electronic payment transaction, to impose a civil penalty of $1,000 per electronic 35
payment transaction for violations of this act , and to provide that this act is non -36
severable. 37
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BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this 39
act may be cited as the “Fair Swipe Act of 2025”. 40
Sec. 2. Definitions. 41
For the purposes of this act, the term: 42

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(1) "Acquirer bank" means a member of a payment card network that contracts 43
with a merchant for the settlement of electronic payment transactions. An acquirer bank may 44
contract directly with merchants or indirectly through a processor to process electronic payment 45
transactions. 46
(2) "Authorization" means the process through which a merchant requests 47
approval for an electronic payment transaction from the issuer. 48
(3) "Clearance" means the process of transmitting final transaction data from a 49
merchant to an issuer for posting to the cardholder's account and the calculation of fees and 50
charges, including interchange fees, that apply to the issuer and the merchant. 51
(4) "Credit card" means a card, plate, coupon book, or other credit device existing 52
for the purpose of obtaining money, property, labor, or services on credit. 53
(5) "Debit card" means a card or other payment code or device issued or approved 54
for use through a payment card network to debit an asset account, regardless of the purpose for 55
which the account is established, whether authorization is based on a signature, a personal 56
identification number, or other means. The term includes a general use prepaid card, as defined 57
in 15 U.S.C. § 1693l-1, but does not include paper checks. 58
(6) "Electronic payment transaction" means a transaction in which a person uses a 59
debit card, a credit card, or other payment code or device issued or approved through a payment 60
card network to debit a deposit account or use a line of credit, whether authorization is based on 61
a signature, a personal identification number, or other means. 62
(7) "Gratuity" means a voluntary monetary contribution to an employee from a 63
guest, patron, or customer in connection with services rendered. 64

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(8) "Interchange fee" means a fee established, charged, or received by a payment 65
card network for the purpose of compensating the issuer for its involvement in an electronic 66
payment transaction. 67
(9) "Issuer" means a person issuing a debit card or credit card or the issuer's agent. 68
(10) "Merchant" means a person that accepts electronic payment transactions and 69
collects and remits a tax. 70
(11) "Payment card network" means an entity that: 71
(A) Directly or through licensed members, processors, or agents, provides 72
the proprietary services, infrastructure, and software to route information and data for the 73
purpose of conducting electronic payment transaction authorization, clearance, and settlement; 74
and 75
(B) A merchant uses to accept as a form of payment a brand of debit card, 76
credit card, or other device that may be used to carry out electronic payment transactions. 77
(12) "Person" means any individual, firm, public or private corporation, 78
government, partnership, association, or any other organization or entity. 79
(13) "Processor" means an entity that facilitates, services, processes, or manages 80
the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect 81
to any electronic payment transaction. 82
(14) "Settlement" means the process of transmitting sales information to the 83
issuing bank for collection and reimbursement of funds to the merchant and calculating and 84
reporting the net transaction amount to the issuer and merchant for an electronic payment 85
transaction that is cleared. 86
(15) "Tax" means sales and use tax imposed pursuant to D.C. Official Code § 47 -87
2002. 88

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(16) "Tax and gratuity documentation" means documentation or data sufficient for 89
the payment card network to determine the total amount of the electronic payment transaction 90
and the tax or gratuity amount of the transaction. Tax documentation may be related to a single 91
electronic payment transaction or multiple electronic payment transactions aggregated over a 92
period of time. Examples of tax documentation include invoices, receipts, journals, ledgers, and 93
tax returns filed with the Office of Tax and Revenue. 94
Sec. 3. Prohibition on charging of interchange fees on sales tax part of credit and debit 95
card transactions. 96
(a) An issuer, a payment card network, an acquirer bank, or a processor shall not receive 97
or charge a merchant any interchange fee on the tax amount or gratuity of an electronic payment 98
transaction if the merchant informs the acquirer bank or its designee of the tax or gratuity amount 99
as part of the authorization or settlement process for the electronic payment transaction. The 100
merchant shall transmit the tax or gratuity amount data as part of the authorization or settlement 101
process to avoid being charged interchange fees on the tax or gratuity amount of an electronic 102
payment transaction. 103
(b) A merchant that does not transmit the tax or gratuity amount data in accordance with 104
this section as part of the authorization or settlement process may submit tax and gratuity 105
documentation for the electronic payment transaction to the acquirer bank or its designee no later 106
than 180 days after the date of the electronic payment transaction, and, within 30 days after the 107
merchant submits the necessary tax and gratuity documentation, the issuer or payment card 108
network shall credit to the merchant the amount of interchange fees charged on the tax or 109
gratuity amount of the electronic payment transaction. 110
(c) This section shall not be construed as imposing liability on a payment card network 111
for the accuracy of the tax or gratuity data reported by the merchant. 112

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(d) It shall be unlawful for an issuer, a payment card network, an acquirer bank, or a 113
processor to alter or manipulate the computation and imposition of interchange fees by 114
increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit or 115
debit card transaction not attributable to taxes or gratuities to circumvent the effect of this 116
section. 117
(e) An issuer, a payment card network, an acquirer bank, a processor, or other designated 118
entity that has received the tax or gratuity documentation and violates subsection (a) of this 119
section shall be subject to a civil penalty of $1,000 per electronic payment transaction and shall 120
refund the merchant the interchange fee calculated on the tax or gratuity amount relative to the 121
electronic payment transaction. 122
Sec. 4. Non-severability. 123
If any provision of section 3 of this act or its application to any person or circumstance is 124
held to be unconstitutional, beyond the statutory authority of the Council, or otherwise invalid, 125
then all provisions of this act shall be deemed invalid. 126
Sec. 5. Fiscal impact statement. 127
The Council adopts the fiscal impact statement in the committee report as the fiscal 128
impact statement required by section 4a of the General Legislative Procedures Act of 1975, 129
approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1-301.47a). 130
Sec. 6. Effective date. 131
This act shall take effect following approval by the Mayor (or in the event of veto by the 132
Mayor, action by the Council to override the veto), a 30-day period of congressional review as 133
provided in section 602(c)( 1) of the District of Columbia Home Rule Act, approved December 134
24, 1973 (87 Stat. 813; D.C. Official Code § 1 -206.02(c)(1)), and publication in the District of 135
Columbia Register. 136