Gem State Wire

Senate Bill 1055, supported by NFIB Idaho, is progressing through the Legislature with an aim to reduce swipe fees for merchants processing credit card transactions. The bill seeks to exclude tips and state and local taxes from these fee calculations.

Experian describes a credit card swipe fee as "a charge a business pays each time a customer makes a purchase using a credit card." This fee includes payments to entities involved in processing the transaction, such as the credit card network, issuer, and merchant's payment processor.

The bill’s statement of purpose states: “This legislation relates to interchange fees (also called swipe fees) charged to merchants on credit and debit card transactions … It requires a payment card network to either deduct the amount of any tax and/or gratuity imposed from the calculation of interchange fees on purchases or rebate an amount of interchange fees imposed on the state or local tax portion or gratuities portion of purchases.”

Swipe fees significantly impact small businesses. As Experian notes, “if a business is charged a swipe fee of 3.5% per transaction, a $100 purchase would incur a $3.50 fee.” Retailers have long contended with the credit card industry over these charges. While accepting credit cards boosts sales and reduces labor costs, swipe fees diminish revenue.

“While accepting credit cards increases sales and lowers labor costs for businesses, swipe fees also reduce business revenue,” Experian explains further. The complexity in budgeting for these fees arises because they vary based on factors like the type of card used, business type, and transaction location. Additionally, businesses have limited negotiation power since key components like interchange fees are set by networks like Visa and Mastercard.

NFIB Idaho urges members and small business owners to support SB 1055 by contacting state legislators or testifying remotely before the Senate Commerce & Human Resources Committee where SB 1055 will be discussed alongside other measures. Participation in NFIB’s Small Business Day at the Capitol is also encouraged to directly communicate concerns about this issue.