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new set of pipes which bifurcated the water, at the meter, Then there is the $1,000 per incident fine for non-compli-
it would be impractical to tally," he said. ance, which ETA wrote "would be deemed unacceptably
severe, especially for small transactions such as the pur-
Esther Pochron, chief sales and marketing officer at EPNA, chase of a pack of gum."
a Chicago-based ISO, said EPNA has begun working with
partner platforms to ensure compliance, but she warned Will Pennsylvania follow Illinois' lead?
the new law could have negative consequences for all The ETA isn't alone in lobbying lawmakers to ditch plans
parties: acquirers, issuers, merchants and consumers. For to exempt taxes and gratuities from interchange. Airlines
example, she noted, issuers are apt to reevaluate rewards for America, a trade group representing U.S. airlines,
programs to offset the reduced revenues. penned a letter to leaders of the Pennsylvania House urg-
ing they reject the legislation prohibiting interchange as-
"If more states enact similar legislation, card issuers may sessments on sales and use taxes.
also respond to the decreased revenue by increasing the
overall interchange rates for certain retail and restaurant "We understand and appreciate that there are a number of
interchange categories in order to offset the revenue loss significant challenges before the General Assembly, and
as a result, thus affecting merchants' overall cost of inter- we respectfully ask that the General Assembly leave un-
change pass-through fees, defeating the purpose of the disturbed a system that works and with which consumers
legislation in the first place," Pochron added. are happy," Sean Williams, vice president for state and lo-
Educating lawmakers cal government affairs, wrote leaders of the Pennsylvania
House.
"The squeeze is not worth the juice," said Scott Talbott, ex-
ecutive vice president at the Electronic Transactions As- Williams warned that passage of the legislation, HB 2394,
sociation. would seriously hamper rewards programs.

The ETA unsuccessfully urged Illinois Governor JB Pritz- "Pennsylvanians love to travel and the miles that custom-
ker to consider a line-item veto of the bill. "This provision ers earn with their credit cards facilitate family vacations,
would put the state of Illinois on a global and nationwide visits to loved ones and weekend getaways," Williams
payments island by upending how consumers conduct wrote. "These rewards programs also bring thousands of
electronic transactions in Illinois with no benefit to the visitors to Pennsylvania and are a critical part of the tour-
consumer or additional revenue to the state," the ETA ism sector. This proposal introduces unnecessary risks to
wrote in a letter to Pritzker. their important sources of value and economic contribu-
tion across the state's economy."
It also would be impractical from an implementation
standpoint, in one year, as "merchants would need new, Florida studying similar move
yet-to-be-developed, specialized terminals and software Legislation to exempt sales tax from interchange was re-
to itemize and communicate segmented data to the card jected in the Florida legislature last year. This year, law-
networks at the time of sale," the ETA added. makers in the Sunshine State have introduced a proposal
to study the move. A similar proposal is pending in the
Big box retailers might be able to adjust their systems to Georgia Senate.
accommodate such requirements, ETA wrote in a letter to
Pennsylvania lawmakers, but not so smaller merchants Americans for Tax Reform, a conservative advocacy group
who use POS terminals with more limited functionality. that lobbies for simpler, lower taxes, is among the groups
"The ability for small merchants to offer a multitude of panning that plan.
payment options is critical to their ability to compete with
big box retailers, give their customers the options they de- "The issue of whether or not the government should
sire, and remain flexible in times of crisis," the ETA wrote. mandate new regulations around interchange fees is
Consumer privacy, monetary concerns actually very simple: it is another example of one private
entity using the government to get their preferred terms
The Illinois law and similar legislation also raise serious for a contract with another private entity put in law," the
privacy considerations as they would require the collec- group states on its website.
tion of detailed, itemized SKU-level purchase informa-
tion, the ETA noted. "The government should not be meddling in these
business-to-business negotiations."
"This is information we do not currently collect," the asso-
ciation wrote in a letter to the Pennsylvania House Finance Patti Murphy, self-described payments maven of the fourth estate, is
Committee. If the legislation pending there is passed, the senior editor at the Green Sheet. She also co-hosts the Merchant Sales
ETA added, "each transaction purchased would have to be
itemized and audited to determine the correct application Podcast, and is president of ProScribes Ink.
of a state sales tax exemption or local tax."
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