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A5014
ASSEMBLY, No. 5014
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED MAY 7, 2026
Sponsored by:
Assemblyman� ROY FREIMAN
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
SYNOPSIS
���� Prohibits credit card and debit interchange fees from
being applied to sales tax and gratuity.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
concerning certain interchange fees and
supplementing Title 56 of the Revised Statutes.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� As used in this act:
���� �Authorization� means the
process through which a merchant requests approval for an electronic payment
transaction from the issuer.
���� �Clearance� means the process
of transmitting final transaction data from a merchant to an issuer for posting
to the cardholder�s account and the calculation of fees and charges, including
interchange fees, that apply to the issuer and the merchant.
���� �Credit card� means a card,
plate, charge card, charge plate, or other single credit device that may be
used from time to time to obtain credit.
���� �Debit card� means any
instrument or device, whether known as a debit card, automated teller machine
card, or by any other name, issued with or without fee by an issuer for the use
of the cardholder in obtaining money, goods, services or anything else of value
through the electronic authorization of a financial institution to debit the
account of the debit card holder. The term shall include a general-use prepaid
card, as defined in 15 U.S.C. s.1693l-1. The term does not include a paper
check.
���� �Electronic payment
transaction� means a transaction in which a person uses a debit card, 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
authorization is based on a signature, personal identification number or other
means.
���� �Gratuity� means money
voluntarily given to an employee from a guest, patron, or customer in
connection with services rendered.
�Interchange fee� means a fee
established, charged, or received by a payment card network for the purpose of
compensating the issuer for the issuer�s involvement in an electronic payment
transaction.
���� �Issuer� means the business
organization or financial institution which issues a credit card or its duly
authorized agent.
���� �Merchant� means a person that
accepts electronic payment transactions and collects and remits a tax.
���� �Payment card network� means
an entity that meets the following criteria:
���� (1)�� directly, or through
licensed members, processors, or agents, provides proprietary services,
infrastructure, and software that routes information and data to conduct debit
card or credit card transaction authorization, clearance, and settlement; or
���� (2)�� a merchant or seller that
uses a credit card or other device that may be used to carry out debit or
credit transactions in order to accept as a form of payment a brand of debit
card.
���� �Processor� means an entity
that facilitates, services, processes, or manages a debit or credit
authorization, billing, transfer, payment procedures, or settlement of an
electronic payment transaction.
���� �Settlement� means the
transfer of funds from a customer�s account to a seller or merchant upon
electronic submission of finalized sales transactions to a payment card
network.
���� �Surcharge� means any means of
increasing the regular price to a cardholder that is not imposed on customers
paying by cash, check, or similar items.
���� �Tax� means any tax imposed
under the �Sales and Use Tax Act,� P.L.1966, c.30, s.1 (C.54:32B-1 et. seq.).
���� 2.��� a.�������� A payment
card network may not establish, receive, or charge any interchange fee on the
tax or gratuity amount of an electronic payment transaction, provided the
merchant transmits the tax or gratuity amount as part of the authorization or
settlement process for the electronic payment transaction.
���� b.��� A merchant that does not
transmit the tax or gratuity amount data in accordance with subsection a. of
this section may submit gratuity data for the electronic payment transaction to
the payment card network or its designee no later than 180 days after the date
of the electronic payment transaction and, within 30 days after the merchant
submits the necessary information, the payment card network shall credit to the
merchant, the amount of interchange fees charged on the tax and gratuity
amounts of the electronic payment transaction.
���� c.���� A payment card network
shall not alter or manipulate the computation 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 not attributable to the tax
or gratuity amount or other fees charged to the merchant to circumvent the
effect of this section.
���� d.��� This section shall not
create liability for a payment card network regarding accuracy of the tax or
gratuity data reported by the merchant.
���� 3.��� A payment card network
that violates this act is subject to a civil penalty of $1,000 per electronic
payment transaction, and the payment card network shall refund to the merchant
the interchange fee calculated on the gratuity or tax amount relative to the
electronic payment transaction.
4.��� This act
shall take effect 180 days after the date of enactment and shall apply to
transactions performed on or after that date.
STATEMENT
���� This bill prohibits payment
card networks from including sales tax and gratuity when applying interchange
fees to transactions.
���� An interchange fee is a fee
collected by a payment card network from merchants when processing debit and
credit card purchases.� The fee is collected by a payment processor and then
passed to the card issuer.� Interchange fees range from 1.5 percent to 3.5
percent depending on the type of card, method of transaction, processing
details, and the size of the transaction.� Interchanges fees help cover issuing
banks� expenses in processing card transactions and provide an incentive for
them to keep offering such services.�
���� Under the bill, payment card
networks are prohibited from charging an interchange fee on a gratuity amount
or tax of an electronic payment transaction so long as the merchant transmits
the gratuity amount as part of the authorization or settlement process for the
electronic payment transaction.� A merchant may also submit gratuity data for
the electronic payment transaction to the payment card network no later than
180 days after the date of the electronic payment transaction and the payment
card network must credit the amount of interchange fee charged on the gratuity
amount of the electronic payment transaction within 30 days after the merchant
submits documentation.� Payment card networks found to be in violation of the
bill will be subject to a $1,000 fine.
���� This bill is intended to
provide relief to business owners who are impacted by credit card fees and
allow small businesses in the service industry to hire more employees, invest
in their business, and continue to serve their communities.�