S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5558
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             February 25, 2025
                                ___________
 
 Introduced  by  Sen.  COONEY -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer 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
 S. 5558                             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-
 S. 5558                             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.