Washington lawmakers have introduced legislation to completely upend the way your credit and debit cards work – creating confusion for consumers and higher costs for small businesses.
Interchange benefits business and consumers
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 a bill in Washington would create a carveout so the tip portion of your purchase is processed differently.
Flaws with the legislation
HB 1623 violates numerous federal laws designed to protect our nation’s safe and sound banking system. The U.S. Office of the Comptroller of the Currency (OCC) filed an amicus brief against this legislation saying, “it is an ill-conceived, highly unusual, and largely unworkable state law that threatens to fragment and disrupt this efficient and effective system” while also leading to increased fraud.
Further, this experimental provision has not been implemented in any jurisdiction across the globe and a system to implement this law does not currently exist.
A burden to small businesses & consumers
But small businesses can’t afford this change. If HB 1623 passes, Washington small business owners, who are already on tight margins, could have to pay for new card processing systems and implementation of new accounting headaches.
Worse yet, to ensure your transaction is accurately processed under the new changes, businesses could have to share additional information about the purchases you make –potentially compromising your privacy.
This is why no other state in the country or no other country around the world currently processes credit and debit card transactions this way. In fact, 29 other states have rejected this idea because of the impact and hurdles it would have on commerce across the state.