Card-Fee Bills Would Benefit Big-Box Retailers but Harm Small Merchants
Texas’ House and Senate are considering legislation to regulate payment-card transactions, with bills that proponents claim would save millions of dollars for merchants and consumers. The evidence, however, suggests that the benefits would accrue mostly to big-box stores, while smaller merchants and consumers will both suffer.
H.B. 4061 and S.B. 2056 would prohibit card-issuing banks from retaining interchange fees on the sales tax and tips portions of a card transaction. This is similar to an Illinois law currently subject to a preliminary injunction for violating federal law.
But the Texas bills would go further by prohibiting banks with more than $85 billion in assets from coordinating with other banks to set interchange fees, or from using the default multilateral interchange fees set by Visa and Mastercard. Supporters claim this will foster competition and drive down costs for everyone. While some big-box chains might see savings, smaller retailers will face higher transaction fees and consumers would see prices rise.