Washington:
Guard
Your Card

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.

Take Action

Tell your state’s leaders: Washington cannot afford the changes this experimental bill will cause. Small businesses cannot afford the new costs and cardholders will not tolerate the loss of convenience and privacy these new changes will bring. The current credit and debit card processing system works for consumers and provides a valuable service to small businesses by facilitating efficient purchases, universal acceptance, and state-of-the-art protections against fraud and personal identity theft.

Contact Your Local Lawmakers

Don’t Threaten Credit Cards

Who pays the price if the legislation moves forward?

Small businesses would need to upgrade their point-of-sale technology and deal with new accounting headaches — while getting little of the benefit.
Consumers could have to pay for tips in cash if the bill moves forward, and private information about what consumers are purchasing will be required to be shared. What’s more, because interchange is what makes rewards and points possible for consumers, reductions to interchange will also reduce 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.
Local banks and credit unions would be put at a disadvantage against national competitors. As a 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 institutions that solely serve public service employees and retirees.
The state would need to use scarce resources to defend legislation that is pre-empted by federal law.

Resources

WA ballooning lawsuit settlements, legal costs add to budget woes

 
Paid for by the Electronic Payments Coalition

www.electronicpaymentscoalition.org

1747 Pennsylvania Ave. Washington, DC 20006