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Bill

S 688

An Act prohibiting card interchange fees on tax or gratuity

194th Legislature (2025-2026) Introduced by Nick Collins and 3 co-sponsors

Massachusetts bill bans card interchange fees on tax and tip portions of transactions to reduce merchant costs and preserve worker earnings.

Reporting date extended to Monday May 4, 2026
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Bill Summary · S 688

Legislative bill overview

S 688 prohibits credit and debit card processing companies from charging interchange fees on portions of transactions designated as taxes or gratuities. The bill aims to reduce the cost burden on businesses and consumers by preventing these fees from being applied to amounts that are legally required (taxes) or discretionary additions (tips).

Why is this important

Interchange fees—the charges card networks impose on merchants for processing payments—currently apply to the full transaction amount, including taxes and tips. This bill would lower transaction costs for businesses and potentially preserve more tip money for workers if merchants choose not to pass fees to employees. For consumers, reduced merchant costs could theoretically translate to lower prices, though actual price reductions are not guaranteed.

Potential points of contention

  • Payment processor opposition: Card networks (Visa, Mastercard, etc.) may argue the bill interferes with their business model and could reduce revenue needed to maintain payment infrastructure
  • Implementation complexity: Merchants would need updated systems to segregate tax and gratuity portions from taxable sales, creating technical and administrative burdens
  • Uncertain consumer benefit: Merchants are not required to pass savings to customers; businesses may retain fee reductions rather than lower prices, limiting direct public benefit
  • Tip protection unclear: The bill doesn't mandate that merchants transfer savings from reduced tip fees to workers, so gratuity savings may not reach service workers as intended

Compiled from official sources — confirm details with the bill’s official record.

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