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to rebate an amount equal to the interchange on the tax
Insider’sreport amount. The legislation doesn't make clear who receives
the rebates. I presume it's merchants.
on payments This is no one-off situation. In 2021, lawmakers in Virginia

shot down a similar bill. This year, in addition to Idaho,
similar legislation is pending in Tennessee and Wisconsin.

Can you imagine the programming time and expense it
would take to comply with such initiatives should they
Interchange under the bills?
become law in any one, or a few states? And who will foot
Sure, processors would have the initial headaches and
attack, again costs, but in the end, those costs will be passed along, to
card-accepting businesses, and ultimately their customers.

By Patti Murphy Cash discounting as counterattack?
ProScribes Inc. Oh, and just in case you thought merchants have shifted
the focus of the interchange debate from Congress to the
s frustrating as legislative deadlocks can be, states, think again. The Merchants Payments Coalition, the
consensus building is no walk in the park group that brought us the phrase "swipe fees," launched on
either. In this industry, we need look no fur- Feb. 28, 2022, a new ad campaign "to educate Congress and
A ther than the Durbin Amendment to the 2010 other policymakers" about what it describes as "the broken
Dodd-Frank Act. When U.S. congressional leadership set card market."
about plotting how to reform the financial sector follow-
ing the financial crisis of 2008, lobbyists got busy pushing The six-figure ad campaign will air in the run-up to April
their clients' agendas. Among them were those working for when both Visa and Mastercard are scheduled to implement
retailers seeking laws addressing interchange. revised interchange rates, which will include rate increases.
The two companies delayed planned increases in both 2020
So they came up with a way to attract public attention to and 2021.
the problem—inventing the term "swipe fee" to describe
interchange and identifying consumers as the ones who The MPC said it will run ads in social media and
ultimately get screwed. Then they took out full-page ads traditional media in and around Washington, D.C.,
with major media outlets and set their lobbyists loose on targeting lawmakers, their staffs, as well as policymakers
Congress. Not to be outgunned, the banking and payments at the Federal Reserve, the Consumer Financial Protection
industries sent their team of seasoned lobbyists to fight Bureau and the Department of Justice.
federal regulation of interchange.
"Large U.S. credit card companies and banks take hard-
When the dust finally settled, there was interchange earned money out of consumers' pockets every day. What's
regulation. It was limited to debit card interchange, and worse, they want more," reads one ad. "While the country
then only for cards issued by the largest banks and credit is still on the road to recovery, credit card companies and
unions. But it was a start. And one I believe emboldened banks are still raising fees that already cost businesses and
retailers to continue seeking legislative remedies to their consumers billions," states another.
dissatisfaction.
Never mind that the last time Congress capped interchange,
State laws target interchange under Durbin, the prime beneficiaries were retailers. They
Case in point: a new law under consideration in Idaho didn't reduce prices due to lower interchange, and about
that would prohibit interchange on the tax portion of a one in five raised prices, according to research.
credit or debit card transaction. This includes sales and
use taxes, hotel and motel room sales taxes, fuel taxes, and If businesses want a break on the cost of card acceptance,
cigarette and tobacco product taxes, according to reporting there's a better way than government intervention:
by an analysis of the bill posted by the Idaho Freedom implement cash discounting. From what I've learned from
Foundation. agents in the field, there's a groundswell of merchant
interest in cash discounting, albeit with small and midsize
Card processors would be required to either "deduct businesses. Were a few larger merchants to follow, it could
the amount of any tax imposed from the calculation of be a game changer.
interchange fees specific to each form of electronic payment Patti Murphy is senior editor at The Green Sheet and self-described pay-
transaction at the time or settlement" or they would have ments maven of the fourth estate. Follow her on Twitter @GS_PayMaven.

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