Massachusetts:
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Your Card

What’s At Stake In Massachusetts

The Massachusetts legislature is considering three proposals, S.688, S.205, and H.1259, that would carve out how the sales tax and tip portions of credit and debit transactions are processed. Two of the three bills, S.205 and H.1259, would also end the universal acceptance of credit cards upon which the global system of commerce depends.

This legislation will create chaos by completely upending the way your credit and debit cards work. If passed, Bay Staters can expect confusion at checkout, new costs for small businesses, and less funding for fraud prevention and rewards.

How Interchange Benefits Everyone

Businesses pay a small percentage of each purchase – approx. 2% – for credit and debit card processing services. That fraction is used to safeguard credit card networks, prevent fraud, and fund reward programs families of all incomes use for essentials like groceries and gas or to help afford family trips.

But the three bills in Massachusetts would create a carveout so the tax and tip portions of your purchase are processed differently. S.205 & H.1259 go even further by blocking the use of a single, standard set of card terms, dismantling the predictable system that lets virtually any store accept virtually any card.

What These Bills Would Do

S.205 & H.1259:

  • Dismantles universal acceptance of cards. The bill does away with the current system small businesses rely upon for uniform, predictable card acceptance and would force every business to negotiate individual rates with any bank around the globe with over $85 billion in assets.
  • Eliminates interchange on sales tax and tip, forcing those amounts to be split out and potentially paid separately with cash or check.
  • Imposes a $1,000 fine on each violating transaction regardless of amount, creating legal and financial risk that could squeeze community banks and credit unions and ripple through the state economy.


S.688:

  • Eliminates interchange on sales tax and tip, driving costly point-of-sale changes and split transactions, meaning customers could have to use cash to pay for sales tax and tips.

Take Action

Massachusetts cannot afford the card chaos S.688, S.205, and H.1259 would create. The current system provides efficient purchases, near-universal acceptance, strong protections against fraud and identity theft, and valuable access to rewards programs. These bills replace it with confusion, costs, and risk.

Take Action Now

Who Would Pay The Price?

Small businesses would need to upgrade their point-of-sale technology and deal with new accounting headaches. What’s more, by ending universal access, each of Massachusetts’ ~700,000 small businesses would have to negotiate individual agreements with every one of the 280 banks around the world with over $85 billion in assets in order to continue accepting card payments. The current system provides small businesses with a single agreement that makes it possible for them to accept cards by any customer of any bank.
Consumers could have to pay for sales tax and tip in cash if the bill moves forward, and private information about what consumers are purchasing will be required to be shared. And, because interchange is what makes rewards and points possible for consumers, reductions to interchange will also diminish the rewards they receive.
Tipped workers would see their livelihoods negatively impacted when consumers are required to tip in cash, a particularly problematic scenario for gig workers who rely on electronic tips as part of their wages.
Community banks and credit unions would be put at a disadvantage against national competitors, as a preliminary ruling on similar legislation in Illinois and an opinion from the Maryland Attorney General indicates the law would only apply to your local community bank and credit union, many solely serving public service employees and retirees.
The state would need to use scarce resources to defend legislation that is pre-empted by federal law.

Who Really Wins

So who is behind this effort to change the easy, convenient, hassle-free and secure credit and debit card system we rely on every day? The largest corporate mega-stores, grocery conglomerates, and convenience store chains are trying to shift costs onto consumers, small businesses, and local financial institutions while adding millions to their profits.

Resources

As You Were Saying: Hands Off Electronic Payments Beacon Hill: Nadeau

 
Paid for by the Electronic Payments Coalition

www.electronicpaymentscoalition.org

1747 Pennsylvania Ave. Washington, DC 20006