2025 -- H 5582

========

LC001605

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2025

____________

A N   A C T

RELATING TO COMMERCIAL LAW--GENERAL REGULATORY PROVISIONS --

INTERCHANGE FEE RESTRICTION ACT

     Introduced By: Representative Patricia A. Serpa

     Date Introduced: February 26, 2025

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 6 of the General Laws entitled "COMMERCIAL LAW — GENERAL

REGULATORY PROVISIONS" is hereby amended by adding thereto the following chapter:

CHAPTER 26.2

INTERCHANGE FEE RESTRICTION ACT

     6-26.2-1. Short title.

     This chapter may be known and cited as the "Interchange Fee Restriction Act".

     6-26.2-2. Definitions.

     As used in this chapter:

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

merchant for the settlement of electronic payment transactions. An acquirer bank may contract

directly with merchants or indirectly through a processor to process electronic payment

transactions.

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

electronic payment transaction from the issuer.

     (3) "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.

     (4) "Credit card" means a card, plate, coupon book, or other credit device existing for the

purpose of obtaining money, property, labor, or services on credit.

     (5) "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 purpose for which the

account is established, whether authorization is based on a signature, a personal identification

number, or other means. Debit card includes a general use prepaid card, as defined in 15 U.S.C.

16931·1. Debit card does not include paper checks.

     (6) "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 authorization is based on a

signature, a personal identification number, or other means.

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

network for the purpose of compensating the issuer for its involvement in an electronic payment

transaction.

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

     (9) "Merchant" means a person that collects and remits a tax.

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

     (i) Directly or through licensed members, processors, or agents, provides the proprietary

services, infrastructure, and software to route information and data for the purpose of conducting

electronic payment transaction authorization, clearance, and settlement; and

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

other device that may be used to carry out electronic payment transactions.

     (11) "Person" means any individual, firm, public or private corporation, government,

partnership, association, or any other organization or entity.

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

or credit authorization, billing, transfer, payment procedures, or settlement with respect to any

electronic payment transaction.

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

for collection and reimbursement of funds to the merchant and calculating and reporting the net

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

     (14) "Tax" means any sales and use tax or excise tax imposed by the state or a municipality.

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

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

transaction. Tax documentation may be related to a single electronic payment transaction or

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

LC001605 - Page 2 of 4

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

department of revenue or local taxing authorities.

     6-26.2-3. Interchange fees on taxes prohibited.

     (a) An issuer, a payment card network, an acquirer bank, or a processor may not receive or

charge a merchant any interchange fee on the tax amount of an electronic payment transaction if

the merchant informs the acquirer bank or its designee of the tax amount as part of the authorization

or settlement process for the electronic payment transaction. The merchant must transmit the tax

amount data as part of the authorization or settlement process to avoid being charged interchange

fees on the tax amount of an electronic payment transaction.

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

(a) of this section may submit tax documentation for the electronic payment transaction to the

acquirer bank or its designee no later than one hundred eighty (180) days after the date of the

electronic payment transaction, and within thirty (30) days after the merchant submits the necessary

tax documentation, the issuer shall credit to the merchant the amount of interchange fees charged

on the tax amount of the electronic payment transaction.

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

of the tax data reported by the merchant.

     (d) It shall be unlawful for an issuer, a payment card network, an acquirer bank, or a

processor to 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 taxes or other fees charged to the retailer to circumvent the effect of

this section.

     6-26.2-4. Penalties.

     An issuer, a payment card network, an acquirer bank, a processor, or other designated entity

that has received the tax amount data and violates § 6-26.2-3 shall have engaged in a deceptive

trade practice in violation of the provisions of chapter 13.1 of title 6 and shall be subject to a civil

penalty of up to one thousand dollars ($1,000) per electronic payment transaction in violation of §

6-26.2-3, and the issuer shall be responsible to refund the merchant the interchange fee calculated

on the tax amount relative to the electronic payment transaction.

     SECTION 2. This act shall take effect upon passage.

========

LC001605

========

LC001605 - Page 3 of 4

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO COMMERCIAL LAW--GENERAL REGULATORY PROVISIONS --

INTERCHANGE FEE RESTRICTION ACT

***

     This act would create the interchange fee restriction act prohibiting interchange fees on

sales and use tax or excise tax when payment is made with a credit or debit card.

     This act would take effect upon passage.

========

LC001605

========

LC001605 - Page 4 of 4