Bill
HB 2089
The bill bans charging interchange fees on the tax or gratuity portion of electronic payments when merchants provide tax/gratuity data, and requires credits if documented within 18
Status: Introduced January 24, 2025; Referred to House Committee on Financial Institutions and Pensions
Purpose
- Establishes the "Consumer Inflation Reduction and Tax Fairness Act" to prevent card issuers, payment card networks, acquirer banks and processors from charging interchange fees on the tax or gratuity portion of electronic card transactions when merchants provide that breakdown to the payment system.
Key definitions (selected)
- Interchange fee: fee charged/received by a payment card network to compensate an issuer for involvement in a card transaction.
- Issuer, payment card network, acquirer bank, processor: entities involved in authorization, clearance and settlement of electronic payment transactions.
- Tax: sales/use/occupation taxes and similar excise taxes collected and remitted by merchants (with specified exclusions).
- Gratuity: voluntary monetary tip given to employees.
Major provisions
- Fee exemption: Issuers, payment card networks, acquirer banks and processors may not charge interchange fees on the tax amount or gratuity amount of an electronic payment transaction if the merchant supplies the tax/gratuity amount as part of the authorization or settlement process.
- Alternative documentation window: If a merchant does not provide tax/gratuity data at authorization/settlement, the merchant may submit “tax documentation” to the acquirer (or designee) within 180 days of the transaction. If submitted, the issuer must credit the merchant the interchange fees charged on the tax/gratuity portion within 30 days of receipt.
- Anti‑circumvention: It is unlawful for these entities, having received tax/gratuity data, to willfully alter or manipulate fee computations to increase fees on the non‑tax/non‑gratuity portion to circumvent the exemption.
- Liability and remedies: Violators are subject to civil penalties and liable to aggrieved merchants; the merchant, the Attorney General, or a county/district attorney may seek injunctions or restraining orders. Issuers that charged interchange fees on tax/gratuity must refund those fees to merchants and are liable for associated amounts.
- Costs recovery and funds: Attorney General or county/district attorneys may recover reasonable investigation and enforcement costs. Penalties recovered by the Attorney General go to the State General Fund; penalties recovered by county/district attorneys go to the county general fund.
- Severability clause included.
Who is affected
- Merchants collecting and remitting sales taxes/gratuities in Kansas (could reduce merchant card‑acceptance costs).
- Issuers, payment card networks, acquirer banks and payment processors (change in fee assessment and compliance obligations).
- State agencies: Attorney General (enforcement), Department of Revenue (minor form updates), Department of Credit Unions and Office of the State Bank Commissioner (compliance oversight during examinations).
- Judicial system and counties: potential increase in civil actions.
Fiscal and implementation notes (from Fiscal Note)
- Attorney General estimated need: $223,838 (FY2026) and $235,029 (FY2027) from the State General Fund to add 1 attorney and 1 investigator plus operating costs; future penalty receipts are uncertain.
- Department of Credit Unions: one‑time estimated review cost $1,350 (absorbed within existing resources).
- Department of Revenue: $620 (FY2026) to update forms/publications.
- Kansas Judicial Branch: potential increased district court caseloads; fiscal impacts uncertain and not reflected in FY2026 Governor’s Budget Report.
- Counties: potential fiscal effects if numerous enforcement actions occur; not estimated.
Procedural/timeline items
- Merchant may transmit tax/gratuity data at authorization/settlement or submit documentation within 180 days post‑transaction.
- Issuer must credit interchange fees charged on the tax/gratuity portion within 30 days after merchant submits documentation.
- Bill introduced Jan 24, 2025; currently referred to Committee on Financial Institutions and Pensions.
Compiled from official sources — confirm details with the bill’s official record.
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