Bill
HF 4956
HF 4956 prohibits interchange fees on the tax portion of electronic tax transactions and sets data rules to credit retroactive fees if tax data is submitted later.
Authoring and purpose
- Bill: HF 4956
- Session: Minnesota 2025-2026
- Purpose: Prohibit interchange fees on the tax portion of electronic payment transactions, specifically for state and local taxes. Create conduct rules governing how tax data is transmitted and how fees are calculated, with the aim of ensuring retailers are not charged interchange fees on taxes collected at the point of sale.
Key definitions ( Section 1 )
- Acquirer bank: A bank that contracts with a merchant to process and settle electronic payment transactions.
- Authorization: Merchant’s request for approval of an electronic payment from the issuer.
- Clearance: Transmission of final transaction data, and calculation of fees, including interchange, between issuer and merchant.
- Credit card / Debit card / Electronic payment transaction: Standard definitions for payment methods and processes.
- Gratuity: Voluntary tip from a consumer.
- Interchange fee: Fee paid to the issuer to compensate for involvement in the transaction.
- Issuer: Bank or entity issuing the card.
- Merchant: A person who collects and remits a tax.
- Payment card network: The network that routes data and facilitates authorization, clearance, and settlement.
- Processor: Entity that facilitates or manages payment transaction procedures.
- Tax / Tax documentation: State or local tax at the point of sale; documentation sufficient for networks to determine tax and gratuity amounts (invoices, receipts, tax filings, etc.).
Main prohibition and requirements ( Subdivision 2 )
- Prohibition on interchange fees for taxes and gratuities:
- If a merchant provides tax or gratuity amount data to the acquirer or its designee during authorization or settlement, the issuer, network, acquirer, or processor may not charge interchange fees on the tax amount or gratuity portion of the transaction.
- Optional compliance timeline for merchants not sending tax/gratuity data:
- If a merchant does not transmit the tax/gratuity data, they may submit tax documentation for the transaction to the acquirer or designee within 180 days after the transaction date.
- After submission, the issuer has 30 days to credit the merchant the amount of interchange fees charged on the tax/gratuity portion.
- Data accuracy liability:
- The section does not create liability for a payment card network regarding the accuracy of tax or gratuity data reported by the merchant.
- Protection against fee manipulation:
- Prohibits issuers, networks, acquirers, or processors from altering or manipulating the calculation or imposition of interchange fees by increasing the rate/amount applicable to portions of a transaction not attributable to taxes or other retailer-charged fees.
Scope and impact
- Affects: Issuers, payment card networks, acquirer banks, processors, and merchants that collect and remit taxes at the point of sale.
- Impact aim: Ensure merchants are not penalized with interchange fees on mandatory tax collections, potentially reducing overall processing costs for retailers and smoothing tax collection costs passed to consumers.
Procedural/timeline notes
- Bill introduced and referred to the Committee on Commerce Finance and Policy (April 13, 2026).
- The bill’s action history shows an amendment-related change to sponsor lineup on April 16, 2026 (author stricken Perryman), indicating active drafting and committee consideration.
- No specific effective date is provided in the text available; typical enactment would follow passage and a set effective date, subject to legislative process.
Overall takeaway
HF 4956 seeks to remove interchange fees from the tax portion of electronic transactions and to establish a data-reporting framework for tax amounts, with a data-submission option for retroactive fee credits if data is not provided promptly. It also limits fee manipulation and clarifies that networks are not liable for data accuracy in tax reporting.
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
