AFSA Opposes State Interchange Fee Bills
Last week AFSA’s State Government Affairs team submitted testimony opposing Maryland HB 29 and Washington SB 5070, both of which seek to limit interchange fees on the gratuity and sales tax portions of electronic transactions. These bills, modeled after Illinois’ controversial Interchange Fee Prohibition Act (IFPA), would shift financial burdens from retailers to financial institutions, creating a host of legal and operational challenges.
AFSA’s testimonies highlight that similar legislation has failed in 29 states over the past 17 years, and the IFPA itself is currently the subject of a legal challenge. A federal court recently granted a partial preliminary injunction against the Illinois law, citing likely violations of the National Bank Act and concerns raised by the Office of the Comptroller of the Currency (OCC). The OCC has warned that such laws could lead to increased fraud risks, constrained consumer services, and a fractured payment system.
In both Maryland and Washington, the proposed legislation would leave financial institutions with two unworkable options: either absorbing the cost of collecting retailers’ sales tax and processing gratuities or refusing to process those portions of electronic transactions, forcing consumers to use cash or checks. Neither outcome benefits consumers, businesses, or financial institutions. Given the significant legal and economic concerns, AFSA urges policymakers in Maryland and Washington to reject HB 29 and SB 5070.
For more information and to read AFSA’s full testimonies, visit the direct advocacy section of AFSA’s website.
January 30th, 2025
