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July 8, 2024 • Issue 24:07:01

Merchants take interchange

battle to the states

The senator went on to urge fellow lawmakers in Washing-
ton to "take a page out of Illinois' book" and pass the Credit
Card Competition Act, a bill he authored that has the back-
ing of a handful of Democrats and Republicans in the Sen-
ate and the House. That bill would require large credit
card issuing banks to render their cards capable of being
processed through two competing networks, only one of
which could be owned by Visa or Mastercard.
Impractical edicts

Those familiar with the Illinois law and similar legislation
pending in other states warn implementation will be time
consuming and costly, especially for small businesses.
Ken Musante, founder of Napa Payments and Consulting,
By Patti Murphy noted the new law will require merchants in Illinois to
maintain two merchant accounts: one for tax and tips and
ampered in their efforts to secure a federal law another for everything else. It would also necessitate a new
regulating credit card interchange, merchants merchant category code specifically for businesses in Illi-
have turned to the states. A new law in Illinois nois, he pointed out, adding that "we would need to police
H prohibits interchange assessments on sales how each account was utilized."
taxes and gratuities, effective next July, and legislation
pending in at least four other states would impose similar Musante likened the situation to a municipality that de-
prohibitions, including Pennsylvania which is poised to cided to charge lower rates for water used for personal
vote on its iteration as of this writing. consumption and a greater amount for irrigation. "Unless,
either there were two pipes to every household (and there
Proponents of these laws argue that paying interchange on was policing to ensure water meant for personal consump-
the tax portion of a sale to paying a tax on a tax. The cost tion was not used for irrigation), or there was a complete
of non-compliance in Illinois is high, at $1,000 per incident, retrofit at the meter of every household and a completely
paid by the offending processor.

Not surprisingly, Senator Dick Durbin, D-Ill., praised law-
makers in his home state, who included the Interchange
Fee Prohibition Act in a budget bill that was nearly 1,300 Contributed articles inside by:
pages in length. Allen Kopelman .....................................................................................23

"The Illinois state legislature took a major step forward Elie Y. Katz ...............................................................................................25
in pushing back against the swipe fees that are charged Ken Musante ..........................................................................................26
by credit card companies – fees that are nonnegotiable for
merchants and that big banks use to pad their already high Leo Arzumanyan ...................................................................................28
profits," Sen. Durbin said in a statement. Jon Protaskey .........................................................................................30

Continued on page 22