ID S1293

State and local taxes listed separately on payment invoices must be excluded from the amount on which interchange fees are calculated, including sales and use taxes, hotel and motel room sales taxes, fuels taxes, and cigarette and tobacco product taxes.

Payment card networks must either deduct excluded tax amounts from interchange fee calculations at settlement or rebate a proportionate amount of the interchange fee.

When merchants can capture and transmit tax amounts at the time of sale, deduction or rebate must occur at settlement; if unable to capture tax amounts at sale, payment card networks must accept proof of taxes collected and promptly credit the merchant's settlement account.

Defines key terms including credit card, debit card, electronic payment transaction, interchange fee, issuer, payment card network, and settlement.

Payment card networks violating this section are subject to a civil penalty of up to $1,000 per violation payable to the plaintiff and must refund surcharges to affected merchants.

Effective date: July 1, 2022.