Interchange fees on state and local taxes prohibited.

A bill for an act

relating to commerce; prohibiting interchange fees on state and local taxes;

proposing coding for new law in Minnesota Statutes, chapter 53B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

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[53B.76] INTERCHANGE FEES; PROHIBITION.

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Subdivision 1.

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Definitions.

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(a) For purposes of this section, the following terms have

the meanings given.

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(b) "Acquirer bank" means a member of a payment card network that contracts with a

merchant, including directly or indirectly through a processor, to process and settle electronic

payment transactions.

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(c) "Authorization" means the process through which a merchant requests approval for

an electronic payment transaction from the issuer.

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(d) "Clearance" means the process to: (1) transmit final transaction data from a merchant

to an issuer for posting to the cardholder's account; and (2) calculate fees and charges,

including interchange fees, that apply to the issuer and the merchant.

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(e) "Credit card" means a card or device issued under an arrangement pursuant to which

a financial institution provides to a cardholder the privilege of obtaining credit from the

financial institution or other person to purchase or lease property or services, obtain a loan,

or otherwise.

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(f) "Debit card" means a card or other payment code or device issued or approved for

use through a payment card network to debit an asset account, regardless of the account's

purpose or whether the debit authorization is based on a signature, a personal identification

number, or other means. Debit card includes a general use prepaid card, as defined in United

States Code, title 15, section 16931-1. Debit card does not include paper checks.

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(g) "Electronic payment transaction" means a transaction in which a person uses a debit

card, a credit card, or other payment code or device issued or approved through a payment

card network to debit a deposit account or use a line of credit, whether the debit or credit

line use authorization is based on a signature, a personal identification number, or other

means.

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(h) "Gratuity" means a voluntary monetary contribution to an employee from a consumer

in connection with services rendered.

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(i) "Interchange fee" means a fee established, charged, or received by a payment card

network to compensate the issuer for the issuer's involvement in an electronic payment

transaction.

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(j) "Issuer" means a person issuing a debit card or credit card. Issuer includes the issuer's

agent.

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(k) "Merchant" means a person who collects and remits a tax.

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(l) "Payment card network" means an entity that:

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(1) directly or through licensed members, processors, or agents provides the proprietary

services, infrastructure, and software to route information and data to conduct electronic

payment transaction authorization, clearance, and settlement; and

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(2) a merchant uses to accept as a form of payment a brand of debit card, credit card, or

another device used to carry out electronic payment transactions.

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(m) "Processor" means an entity that facilitates, services, processes, or manages the

debit or credit authorization, billing, transfer, payment procedures, or settlement with respect

to an electronic payment transaction.

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(n) "Settlement" means the process of transmitting sales information to the issuing bank

to collect and reimburse funds to the merchant and calculate and report the net transaction

amount to the issuer and merchant for an electronic payment transaction that is cleared.

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(o) "Tax" means any tax imposed by the state or local government at the point of sale.

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(p) "Tax documentation" means documentation sufficient for the payment card network

to determine the total amount of the electronic payment transaction and the tax or gratuity

amount of the transaction, whether related to a single electronic payment transaction or

multiple electronic payment transactions aggregated over a period of time. Tax documentation

includes but is not limited to invoices, receipts, journals, ledgers, and tax returns filed with

the commissioner of revenue.

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Subd. 2.

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Interchange fees on taxes and gratuity prohibited.

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(a) An issuer, a payment

card network, an acquirer bank, or a processor is prohibited from receiving or charging a

merchant an interchange fee on the tax amount or gratuity of an electronic payment

transaction if the merchant informs the acquirer bank or the acquirer bank's designee of the

tax or gratuity amount as part of the authorization or settlement process for the electronic

payment transaction. The merchant must transmit the tax or gratuity amount data as part of

the authorization or settlement process to avoid being charged interchange fees on the tax

or gratuity amount of an electronic payment transaction.

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(b) A merchant that does not transmit the tax or gratuity amount data in accordance with

this section may submit tax documentation for the electronic payment transaction to the

acquirer bank or the acquirer bank's designee no later than 180 days after the date the

electronic payment transaction occurs. Within 30 days after the date the merchant submits

the necessary tax documentation, the issuer must credit to the merchant the amount of

interchange fees charged on the tax or gratuity amount of the electronic payment transaction.

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(c) This section does not create liability for a payment card network regarding the

accuracy of the tax or gratuity data reported by the merchant.

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(d) An issuer, a payment card network, an acquirer bank, or a processor is prohibited

from altering or manipulating the calculation and imposition of interchange fees by increasing

the rate or amount of the fees applicable to or imposed upon the portion of a credit or debit

card transaction that are not attributable to taxes or other fees charged to the retailer.

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