Newly proposed legislation in Pennsylvania could jeopardize customers’ privacy and become a financial burden for small businesses, the Electronic Payments Coalition (EPC) said Monday.
The legislation, House Bill 2394, would prohibit financial institutions from collected transaction fees on the sale tax portion of credit and debit card transactions. Called interchange, the fees are the card acceptance costs merchants pay for transmitting payments electronically. Critics said the legislation would raise privacy concerns for consumers and add to the burden small businesses would pay.
“This draconian provision could require businesses to pass along details about every consumer purchase, force new costs on small businesses and not benefit the commonwealth one iota,” EPC Executive Chairman Richard Hunt said. “What it will do, however, is jeopardize the secure, convenient card payment systems used by Pennsylvania families and small businesses, just to line the pockets of corporate mega-stores. We have seen the buyer’s remorse from similar provisions in Illinois. Pennsylvania politicians should not follow their example.”
Critics of the bill said it could force merchants to collect the sales tax as a separate transaction, essentially requiring merchants to file two transactions for every taxable sale. The measure could also require merchants to send payment companies additional information about a customer’s shopping habits, potentially creating consumer privacy issues.
The coalition said the legislation is similar to a deal slipped into the Illinois budget that passed over Memorial Day Weekend. The proposal is set to take effect in July 2025.
“This stands in direct opposition to the basic principles of consumer protection,” stated Patrick Conway, President & CEO of CrossState Credit Union Association. “The legislation would disrupt credit card rewards and other benefits sought after by consumers and small businesses, and risk the exposure of confidential consumer information.”
The legislation was re-introduced on June 10 and forwarded to committee and is set for a committee vote on June 12.