Text: SSB3192            Text: SSB3194


Senate Study Bill 3193

SENATE FILE BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM) A BILL FOR 1 An Act relating to electronic payment transactions by 2 prohibiting the collection of interchange fees on specified 3 taxes and fees, providing penalties, and including 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 5515SC (2) 84 rn/sc PAG LIN 1 1 Section 1. NEW SECTION. 424A.1 Definitions. 1 2 As used in this chapter, unless the context otherwise 1 3 requires: 1 4 1. "Electronic payment transaction" means a transaction 1 5 in which a person uses a debit card, credit card, or other 1 6 payment code or device, issued or approved through a payment 1 7 card network to debit an asset account or use a line of 1 8 credit, whether authorization is based on signature, personal 1 9 identification number, or other means. 1 10 2. "Interchange fee" means any fee established, charged, 1 11 or received by a payment card network for the purpose of 1 12 compensating the issuer for its involvement in an electronic 1 13 payment transaction. 1 14 3. "Issuer" means any person who issues a debit card or 1 15 credit card, or the issuer's agent. 1 16 4. "Payment card network" means an entity that directly, 1 17 or through licensed members, processors, or agents, provides 1 18 the proprietary services, infrastructure, and software that 1 19 route information and data to conduct debit card or credit 1 20 card transaction authorization, clearance, and settlement, and 1 21 that a merchant or seller uses in order to accept as a form of 1 22 payment a brand of debit card, credit card, or other device 1 23 that may be used to carry out debit or credit transactions. 1 24 5. "Settlement" means the transfer of funds from a 1 25 customer's account to a seller or merchant upon electronic 1 26 submission of finalized sales transactions to the payment card 1 27 network. 1 28 Sec. 2. NEW SECTION. 424A.2 Interchange fees == limitation. 1 29 The amount of any tax or fee imposed by state or local 1 30 government that is calculated as a percentage of an electronic 1 31 payment transaction amount and listed separately on the payment 1 32 invoice or other demand for payment, or the amount of any 1 33 fuel taxes imposed under chapter 452A, shall be excluded from 1 34 the amount of an interchange fee charged for that electronic 1 35 payment transaction. 2 1 Sec. 3. NEW SECTION. 424A.3 Circumvention prohibited. 2 2 It shall be unlawful to alter or manipulate the computation 2 3 and imposition of interchange fees by increasing the rate or 2 4 amount of fee applicable to or imposed upon that portion of an 2 5 electronic payment transaction not attributable to a state or 2 6 local tax or fee to circumvent the effect of section 424A.2. 2 7 Sec. 4. NEW SECTION. 424A.4 Deduction or rebate == 2 8 settlement procedure. 2 9 A payment card network shall either deduct the amount of 2 10 any tax or fee imposed as described in section 424A.2 from the 2 11 calculation of interchange fees specific to each form or type 2 12 of electronic payment transaction at the time of settlement 2 13 or shall rebate an amount of interchange fee proportionate 2 14 to the amount attributable to the tax or fee. The deduction 2 15 or rebate shall occur at the time of settlement when the 2 16 merchant or seller is able to capture and transmit tax or fee 2 17 amounts relevant to the sale at the time of sale as part of the 2 18 transaction finalization. If the merchant or seller is unable 2 19 to capture and transmit tax or fee amounts relevant to the sale 2 20 at the time of sale, the payment card network shall accept 2 21 proof of tax or fee amounts collected on sales subject to an 2 22 interchange fee upon the submission of sales data by the seller 2 23 or merchant and shall promptly credit the merchant or seller's 2 24 settlement account. 2 25 Sec. 5. NEW SECTION. 424A.5 Enforcement == penalty. 2 26 1. The provisions of this chapter are subject to the powers 2 27 and authority of the attorney general or the attorney general's 2 28 designee. 2 29 2. If a court finds in an action brought by the attorney 2 30 general, or the attorney general's designee, that a person 2 31 has intentionally violated a provision of this chapter, the 2 32 person shall be subject to a civil penalty of not less than 2 33 one thousand dollars nor more than five thousand dollars for 2 34 each violation. In addition, a person paying interchange fees 2 35 imposed in violation of this chapter may bring an action at law 3 1 to recover actual damages. The court may order such equitable 3 2 relief as it deems necessary, including temporary and permanent 3 3 injunctive relief. 3 4 Sec. 6. NEW SECTION. 424A.6 Nonseverability. 3 5 In the event that any provision of this chapter or its 3 6 application is held to be invalid with regard to a federally 3 7 chartered bank or other financial institution, it shall be 3 8 held equally invalid with regard to a financial institution 3 9 licensed by or operating within this state, and to this end the 3 10 provisions of this chapter are not severable. 3 11 Sec. 7. NEW SECTION. 537C.1 Interchange fees == 3 12 computation. 3 13 The computation of an interchange fee established, charged, 3 14 or received by a payment card network for the purpose of 3 15 compensating the issuer for its involvement in an electronic 3 16 payment transaction, as those terms are defined in section 3 17 424A.1, shall be governed by the provisions of chapter 424A. 3 18 Sec. 8. APPLICABILITY. This Act is applicable to electronic 3 19 payment transactions processed on or after July 1, 2012. 3 20 EXPLANATION 3 21 This bill prohibits the imposition of interchange fees on 3 22 specified portions of electronic payment transactions. 3 23 The bill contains several definitions. The bill defines an 3 24 "electronic payment transaction" to mean a transaction in which 3 25 a person uses a debit card, credit card, or other payment code 3 26 or device, issued or approved through a payment card network 3 27 to debit an asset account or use a line of credit, whether 3 28 authorization is based on signature, personal identification 3 29 number, or other means. The bill defines an "interchange fee" 3 30 to mean any fee established, charged, or received by a payment 3 31 card network for the purpose of compensating the issuer for 3 32 its involvement in an electronic payment transaction. The 3 33 bill defines an "issuer" to mean any person who issues a debit 3 34 card, credit card, or the issuer's agent. The bill defines 3 35 "payment card network" to mean an entity that directly, or 4 1 through licensed members, processors, or agents, provides 4 2 the proprietary services, infrastructure, and software that 4 3 route information and data to conduct debit card or credit 4 4 card transaction authorization, clearance, and settlement, and 4 5 that a merchant or seller uses in order to accept as a form of 4 6 payment a brand of debit card, credit card, or other device 4 7 that may be used to carry out debit or credit transactions. 4 8 The bill defines "settlement" to mean the transfer of funds 4 9 from a customer's account to a seller or merchant upon 4 10 electronic submission of finalized sales transactions to the 4 11 payment card network. 4 12 The bill provides that the amount of any tax or fee imposed 4 13 by state or local government that is calculated as a percentage 4 14 of the payment amount and listed separately on the payment 4 15 invoice or other demand for payment, or the amount of any 4 16 state fuel taxes imposed, shall be excluded from the amount 4 17 of an interchange fee charged for the purpose of completing 4 18 an electronic payment transaction. The bill provides that it 4 19 shall be unlawful to alter or manipulate these provisions by 4 20 increasing the rate or amount of fee applicable to or imposed 4 21 upon that portion of an electronic payment transaction not 4 22 attributable to a state or local tax or fee. 4 23 The bill's provisions are subject to the powers and 4 24 authority of the attorney general or the attorney general's 4 25 designee. The bill provides for a civil penalty if a person 4 26 has intentionally violated the bill's provisions of not 4 27 less than $1,000 nor more than $5,000 for each violation. 4 28 Additionally, the bill provides that a person paying 4 29 interchange fees imposed in violation of this chapter may 4 30 bring an action at law to recover actual damages, and that the 4 31 court may order such equitable relief as it deems necessary, 4 32 including temporary and permanent injunctive relief. 4 33 The bill specifies procedures for exclusion of taxes or fees 4 34 from the computation of interchange fees. The bill provides 4 35 that a payment card network shall either deduct the amount 5 1 of any tax or fee from the calculation of interchange fees 5 2 specific to each form or type of electronic payment transaction 5 3 at the time of settlement, or rebate an amount of interchange 5 4 fee proportionate to the amount attributable to the tax or fee. 5 5 The bill provides that the deduction or rebate shall occur at 5 6 the time of settlement when the merchant or seller is able to 5 7 capture and transmit tax or fee amounts relevant to the sale 5 8 at the time of sale as part of the transaction finalization. 5 9 In the event that the merchant or seller is unable to capture 5 10 and transmit tax or fee amounts relevant to the sale at the 5 11 time of sale, such as when the tax or fee is collected at the 5 12 wholesale level or when a credit or debit card terminal is 5 13 incapable of capturing and transmitting tax or fee amounts, 5 14 the bill provides that the payment card network shall accept 5 15 proof of tax or fee amounts collected on sales subject to 5 16 an interchange fee upon the submission of sales data by the 5 17 seller or merchant and promptly credit the merchant or seller's 5 18 settlement account. 5 19 The bill provides that in the event that any provision 5 20 contained in the bill or its application is held to be invalid 5 21 with regard to a federally chartered bank or other financial 5 22 institution, it shall be held equally invalid with regard to a 5 23 financial institution licensed by or operating within Iowa. 5 24 The bill includes a provision in Title XIII of the Code, 5 25 governing commerce, indicating that the computation of an 5 26 interchange fee established, charged, or received by a payment 5 27 card network for the purpose of compensating the issuer for 5 28 its involvement in an electronic payment transaction shall be 5 29 governed by the provisions of Code chapter 424A, as created in 5 30 the bill. 5 31 The bill is applicable to electronic payment transactions 5 32 processed on or after July 1, 2012. LSB 5515SC (2) 84 rn/sc
Text: SSB3192            Text: SSB3194