Card fee legislation aims to relieve business from ‘tax on the tax’

TALLAHASSEE, Fla. (FLV) – Lawmakers are considering legislation that would allow merchants to avoid paying card interchange fees on government sales taxes, a move Republican sponsors said will help businesses and consumers.

Retailers tend to pay between 2% and 4% in interchange fees, also called swipe fees, on a credit card transaction.

Because of this, retailers pay interchange fees on not only the base price of a transaction, but also pay fees on the sales tax they are collecting for the state.

Sen. Travis Hutson, R-Palm Coast, is sponsoring the bill while Rep. Mike Caruso, R-Delray Beach, carries a similar House version.

“It’s inherently a tax on the tax, which hurts our businesses and more importantly, they’re probably passing it off to the consumers,” Hutson said.

The legislation would set up a process for merchants to report the sales taxes to the payment card network to avoid paying the extra fee on the sales taxes.

“So it just provides many options to say ‘credit card processors, don’t hurt consumers. Don’t hurt our businesses,'” Hutson said.

In 2021, retailers’ credit and debit card processing fees totaled $137.8 billion, which was up 25% from the previous year, according to the Food Industry Association.

Visa and Mastercard then raised fees in 2022.

The Florida Credit Union Association has launched a campaign against the proposals, claiming that the technology to calculate individual interchange costs on individual taxable items does not exist.

“There is no doubt that large retailers would likely be able to afford these specialized systems at a minimal cost, but our mom-and-pop shops on Main Street will be burdened with additional costs that could lead stores to stop accepting card payments or worse, close their businesses,” the group’s website said.

However, Hutson said businesses would not be required to buy the technology or hire an accountant to opt out of paying the additional fees.

“So if it’s going to hurt the business, the business will not participate,” Hutson said. “It’s the bottom line we’re trying to get at.”

French Brown spoke in committee, representing the Florida Retail Federation and the Florida Restaurant Lodging Association. He said the interchange fees are costing Florida businesses $288 million each year on the Florida sales tax.

“When businesses took a look at their costs and expenses during the pandemic, they realized the interchange fee was the number two cost, number two expense behind their labor force,” Brown explained.

Rep. Webster Barnaby, R-Deltona, said he was concerned about interchange fees being the number two cost and voted in support of the bill.

Rep. Allison Tant, D-Tallahassee, voted against the bill in committee, believing that Florida consumers would pay more in the end.