S T A T E O F N E W Y O R K
________________________________________________________________________
6603
2025-2026 Regular Sessions
I N A S S E M B L Y
March 6, 2025
___________
Introduced by M. of A. LEE -- read once and referred to the Committee on
Consumer Affairs and Protection
AN ACT to amend the general business law, in relation to enacting the
"interchange fee prohibition act"
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Short title. This act shall be known and may be cited as
the "interchange fee prohibition act".
§ 2. The general business law is amended by adding a new article 42-A
to read as follows:
ARTICLE 42-A
INTERCHANGE FEE PROHIBITION ACT
SECTION 1200. DEFINITIONS.
1201. INTERCHANGE FEES ON TAXES PROHIBITED.
1202. PENALTIES.
§ 1200. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE, THE FOLLOWING
TERMS SHALL HAVE THE FOLLOWING MEANINGS:
1. "ACQUIRER BANK" MEANS A MEMBER OF A PAYMENT CARD NETWORK THAT
CONTRACTS WITH A MERCHANT FOR THE SETTLEMENT OF ELECTRONIC PAYMENT TRAN-
SACTIONS. AN ACQUIRER BANK MAY CONTRACT DIRECTLY WITH MERCHANTS OR INDI-
RECTLY THROUGH A PROCESSOR TO PROCESS ELECTRONIC PAYMENT TRANSACTIONS;
2. "AUTHORIZATION" MEANS THE PROCESS THROUGH WHICH A MERCHANT REQUESTS
APPROVAL FOR AN ELECTRONIC PAYMENT TRANSACTION FROM THE ISSUER;
3. "CLEARANCE" MEANS THE PROCESS OF TRANSMITTING FINAL TRANSACTION
DATA FROM A MERCHANT TO AN ISSUER FOR POSTING TO THE CARDHOLDER'S
ACCOUNT AND THE CALCULATION OF FEES AND CHARGES, INCLUDING INTERCHANGE
FEES, THAT APPLY TO THE ISSUER AND THE MERCHANT;
4. "CREDIT CARD" MEANS A CARD, PLATE, COUPON BOOK, OR OTHER CREDIT
DEVICE EXISTING FOR THE PURPOSE OF OBTAINING MONEY, PROPERTY, LABOR, OR
SERVICES ON CREDIT;
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08851-01-5
A. 6603 2
5. "DEBIT CARD" MEANS A CARD OR OTHER PAYMENT CODE OR DEVICE ISSUED OR
APPROVED FOR USE THROUGH A PAYMENT CARD NETWORK TO DEBIT AN ASSET
ACCOUNT, REGARDLESS OF THE PURPOSE FOR WHICH THE ACCOUNT IS ESTABLISHED,
WHETHER AUTHORIZATION IS BASED ON A SIGNATURE, A PERSONAL IDENTIFICATION
NUMBER, OR OTHER MEANS. "DEBIT CARD" INCLUDES A GENERAL USE PREPAID
CARD, AS DEFINED IN 15 U.S.C. 16931-1. "DEBIT CARD" SHALL NOT INCLUDE
PAPER CHECKS;
6. "ELECTRONIC PAYMENT TRANSACTION" MEANS A TRANSACTION IN WHICH A
PERSON USES A DEBIT CARD, A CREDIT CARD, OR OTHER PAYMENT CODE OR DEVICE
ISSUED OR APPROVED THROUGH A PAYMENT CARD NETWORK TO DEBIT A DEPOSIT
ACCOUNT OR USE A LINE OF CREDIT, WHETHER AUTHORIZATION IS BASED ON A
SIGNATURE, A PERSONAL IDENTIFICATION NUMBER, OR OTHER MEANS;
7. "GRATUITY" MEANS A VOLUNTARY MONETARY CONTRIBUTION TO AN EMPLOYEE
FROM A GUEST, PATRON, OR CUSTOMER IN CONNECTION WITH SERVICES RENDERED;
8. "INTERCHANGE FEE" MEANS A FEE ESTABLISHED, CHARGED, OR RECEIVED BY
A PAYMENT CARD NETWORK FOR THE PURPOSE OF COMPENSATING THE ISSUER FOR
ITS INVOLVEMENT IN AN ELECTRONIC PAYMENT TRANSACTION;
9. "ISSUER" MEANS A PERSON ISSUING A DEBIT CARD OR CREDIT CARD OR THE
ISSUER'S AGENT;
10. "MERCHANT" MEANS A PERSON THAT COLLECTS AND REMITS A TAX;
11. "PAYMENT CARD NETWORK" MEANS AN ENTITY THAT:
(A) DIRECTLY OR THROUGH LICENSED MEMBERS, PROCESSORS, OR AGENTS,
PROVIDES THE PROPRIETARY SERVICES, INFRASTRUCTURE, AND SOFTWARE TO ROUTE
INFORMATION AND DATA FOR THE PURPOSE OF CONDUCTING ELECTRONIC PAYMENT
TRANSACTION AUTHORIZATION, CLEARANCE, AND SETTLEMENT; AND
(B) A MERCHANT USES TO ACCEPT AS A FORM OF PAYMENT A BRAND OF DEBIT
CARD, CREDIT CARD, OR OTHER DEVICE THAT MAY BE USED TO CARRY OUT ELEC-
TRONIC PAYMENT TRANSACTIONS;
12. "PERSON" MEANS ANY INDIVIDUAL, FIRM, PUBLIC OR PRIVATE CORPO-
RATION, GOVERNMENT, PARTNERSHIP, ASSOCIATION, OR ANY OTHER ORGANIZATION
OR ENTITY;
13. "PROCESSOR" MEANS AN ENTITY THAT FACILITATES, SERVICES, PROCESSES,
OR MANAGES THE DEBIT OR CREDIT AUTHORIZATION, BILLING, TRANSFER, PAYMENT
PROCEDURES, OR SETTLEMENT WITH RESPECT TO ANY ELECTRONIC PAYMENT TRANS-
ACTION;
14. "SETTLEMENT" MEANS THE PROCESS OF TRANSMITTING SALES INFORMATION
TO THE ISSUING BANK FOR COLLECTION AND REIMBURSEMENT OF FUNDS TO THE
MERCHANT AND CALCULATING AND REPORTING THE NET TRANSACTION AMOUNT TO THE
ISSUER AND MERCHANT FOR AN ELECTRONIC PAYMENT TRANSACTION THAT IS
CLEARED;
15. "TAX" MEANS ANY SALES AND USE TAX OR EXCISE TAX IMPOSED BY THE
STATE OR A UNIT OF LOCAL GOVERNMENT IN THE STATE; AND
16. "TAX DOCUMENTATION" MEANS DOCUMENTATION SUFFICIENT FOR THE PAYMENT
CARD NETWORK TO DETERMINE THE TOTAL AMOUNT OF THE ELECTRONIC PAYMENT
TRANSACTION AND THE TAX OR GRATUITY AMOUNT OF THE TRANSACTION. TAX
DOCUMENTATION MAY BE RELATED TO A SINGLE ELECTRONIC PAYMENT TRANSACTION
OR MULTIPLE ELECTRONIC PAYMENT TRANSACTIONS AGGREGATED OVER A PERIOD OF
TIME. EXAMPLES OF TAX DOCUMENTATION INCLUDE, BUT ARE NOT LIMITED TO,
INVOICES, RECEIPTS, JOURNALS, LEDGERS, AND TAX RETURNS FILED WITH THE
DEPARTMENT OF TAXATION AND FINANCE OR LOCAL TAXING AUTHORITIES.
§ 1201. INTERCHANGE FEES ON TAXES PROHIBITED. 1. AN ISSUER, A PAYMENT
CARD NETWORK, AN ACQUIRER BANK, OR A PROCESSOR SHALL NOT RECEIVE OR
CHARGE A MERCHANT ANY INTERCHANGE FEE ON THE TAX AMOUNT OR GRATUITY OF
AN ELECTRONIC PAYMENT TRANSACTION IF THE MERCHANT INFORMS THE ACQUIRER
BANK OR ITS DESIGNEE OF THE TAX OR GRATUITY AMOUNT AS PART OF THE
AUTHORIZATION OR SETTLEMENT PROCESS FOR THE ELECTRONIC PAYMENT TRANS-
A. 6603 3
ACTION. THE MERCHANT SHALL TRANSMIT THE TAX OR GRATUITY AMOUNT DATA AS
PART OF THE AUTHORIZATION OR SETTLEMENT PROCESS TO AVOID BEING CHARGED
INTERCHANGE FEES ON THE TAX OR GRATUITY AMOUNT OF AN ELECTRONIC PAYMENT
TRANSACTION.
2. A MERCHANT THAT DOES NOT TRANSMIT THE TAX OR GRATUITY AMOUNT DATA
IN ACCORDANCE WITH THIS SECTION MAY SUBMIT TAX DOCUMENTATION FOR THE
ELECTRONIC PAYMENT TRANSACTION TO THE ACQUIRER BANK OR ITS DESIGNEE NO
LATER THAN ONE HUNDRED EIGHTY DAYS AFTER THE DATE OF THE ELECTRONIC
PAYMENT TRANSACTION, AND, WITHIN THIRTY DAYS AFTER THE MERCHANT SUBMITS
THE NECESSARY TAX DOCUMENTATION, THE ISSUER MUST CREDIT TO THE MERCHANT
THE AMOUNT OF INTERCHANGE FEES CHARGED ON THE TAX OR GRATUITY AMOUNT OF
THE ELECTRONIC PAYMENT TRANSACTION.
3. THIS SECTION DOES NOT CREATE LIABILITY FOR A PAYMENT CARD NETWORK
REGARDING THE ACCURACY OF THE TAX OR GRATUITY DATA REPORTED BY THE
MERCHANT.
4. IT SHALL BE UNLAWFUL FOR AN ISSUER, A PAYMENT CARD NETWORK, AN
ACQUIRER BANK, OR A PROCESSOR TO ALTER OR MANIPULATE THE COMPUTATION AND
IMPOSITION OF INTERCHANGE FEES BY INCREASING THE RATE OR AMOUNT OF THE
FEES APPLICABLE TO OR IMPOSED UPON THE PORTION OF A CREDIT OR DEBIT CARD
TRANSACTION NOT ATTRIBUTABLE TO TAXES OR OTHER FEES CHARGED TO THE
RETAILER TO CIRCUMVENT THE EFFECT OF THIS SECTION.
§ 1202. PENALTIES. 1. AN ISSUER, A PAYMENT CARD NETWORK, AN ACQUIRER
BANK, A PROCESSOR, OR OTHER DESIGNATED ENTITY THAT HAS RECEIVED THE TAX
OR GRATUITY AMOUNT DATA AND VIOLATES SECTION TWELVE HUNDRED ONE OF THIS
ARTICLE IS SUBJECT TO A CIVIL PENALTY OF ONE THOUSAND DOLLARS PER ELEC-
TRONIC PAYMENT TRANSACTION, AND THE ISSUER SHALL REFUND THE MERCHANT THE
INTERCHANGE FEE CALCULATED ON THE TAX OR GRATUITY AMOUNT RELATIVE TO THE
ELECTRONIC PAYMENT TRANSACTION.
2. AN ENTITY, OTHER THAN THE MERCHANT, INVOLVED IN FACILITATING OR
PROCESSING AN ELECTRONIC PAYMENT TRANSACTION, INCLUDING, BUT NOT LIMITED
TO, AN ISSUER, A PAYMENT CARD NETWORK, AN ACQUIRER BANK, A PROCESSOR, OR
OTHER DESIGNATED ENTITY, MAY NOT DISTRIBUTE, EXCHANGE, TRANSFER, DISSEM-
INATE, OR USE THE ELECTRONIC PAYMENT TRANSACTION DATA EXCEPT TO FACILI-
TATE OR PROCESS THE ELECTRONIC PAYMENT TRANSACTION OR AS REQUIRED BY
LAW. A VIOLATION OF THIS SUBDIVISION CONSTITUTES A VIOLATION OF ARTICLE
TWENTY-TWO-A OF THIS CHAPTER.
§ 3. Severability. If any clause, sentence, paragraph, subdivision,
section or part of this act shall be adjudged by any court of competent
jurisdiction to be invalid, such judgment shall not affect, impair, or
invalidate the remainder thereof, but shall be confined in its operation
to the clause, sentence, paragraph, subdivision, section or part thereof
directly involved in the controversy in which such judgment shall have
been rendered. It is hereby declared to be the intent of the legislature
that this act would have been enacted even if such invalid provisions
had not been included herein.
§ 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law.