Bill
SB 917
The bill lets merchants exclude sales tax and gratuity from interchange fee calculations and limits data use, aiming to cut fees and protect privacy.
Status note
- The materials provided include mixed records (an unrelated Illinois draft and a Maryland fiscal note). The bill text summarized below is Maryland Senate Bill 917 (Sen. Kramer). The top of your file lists the bill as "Withdrawn by Sponsor," but the legislative-action timeline in the file also includes passage and a gubernatorial signature with an effective date of 9/1/2025. Because those records conflict, confirm current enactment status with the official Maryland General Assembly or state code before relying on effective-date or enforcement details.
Purpose and intent
- Require payment-system participants to exclude sales tax and voluntary gratuity amounts from the base used to calculate interchange fees, and to limit how electronic payment transaction data may be used or distributed. The aim is to reduce merchants’ interchange-fee burden on tax/gratuity amounts and to constrain commercial uses of transaction data.
Key provisions
- Definitions: establishes terms (acquirer bank, authorization, clearance, debit/credit card, electronic payment transaction, gratuity, interchange fee, issuer, merchant, payment card network, processor, settlement, tax, and “tax and gratuity documentation”).
- Exclusion of tax/gratuity from interchange base:
- A merchant may request that an issuer, payment card network, acquirer bank, or processor exclude the amount of sales tax or gratuity included in a transaction from the amount on which an interchange fee is charged by transmitting supporting documentation as part of the authorization or settlement.
- If documentation is provided in the authorization/settlement, the required exclusion must be applied.
- If not provided at authorization, a merchant may submit documentation to the acquirer (or designee) within 180 days of the transaction; within 30 days of such submission the issuer must credit the merchant the amount of interchange fees charged on the tax/gratuity portion.
- Payment card networks are not made liable for the accuracy of merchant-submitted documentation.
- Anti‑avoidance: entities may not respond by increasing interchange rates or otherwise manipulating fees to offset the exclusion.
- Restrictions on transaction-data use: non-merchant entities may not distribute, sell, exchange, transfer, disseminate, or use electronic payment transaction data except for:
1. facilitating or processing the transaction;
2. fraud monitoring/prevention;
3. supporting loyalty, rewards, or promotions;
4. tailoring products/services to customer needs;
5. otherwise required by law.
- Enforcement and penalties:
- Failure to exclude tax/gratuity or to credit the merchant after proper documentation exposes the offending entity to a civil penalty of $1,000 per transaction.
- Violations are deemed unfair, abusive, or deceptive trade practices under the Maryland Consumer Protection Act (MCPA) and are subject to MCPA enforcement (civil penalties, potential misdemeanor penalties where applicable).
Who is affected
- Merchants (especially small businesses): likely financial benefit from lower effective interchange fees on tax/gratuity amounts, but may face operational/technology costs (POS upgrades or reporting changes) to provide required documentation.
- Issuers, payment card networks, acquirer banks, and processors: new operational, compliance, and potential penalty exposure.
- Consumers: indirect effects via merchant costs/pricing; privacy protections around transaction data may benefit consumers.
Fiscal and operational impacts
- State and local fiscal impact is expected to be minimal (existing MCPA enforcement handled within current resources).
- Small businesses: meaningful net benefit from fee reductions, offset in part by potential equipment, software, or reporting compliance costs.
Implementation/timing
- The bill text provides a 180‑day lookback window for merchants to submit documentation and requires issuers to credit merchants within 30 days of such submission.
- Verify the bill’s enactment and effective date (records indicate an effective date of 9/1/2025, but confirm due to conflicting status notes).
Compiled from official sources — confirm details with the bill’s official record.
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