Interchange Fee Ban is Bad for Consumers and Taxpayers

Date: April 24, 2023
To: Members of the Senate Rules Committee
From: National Taxpayers Union
Re: Oppose SB 564

Dear Chairman Mayfield, Vice Chairman Perry and Members of the Senate Committee on Rules, On behalf of National Taxpayers Union (NTU), we write to offer our opposition to SB 564, which would prohibit interchange fees on the sales tax portion of electronic payment transactions in Florida. We are concerned that this legislation, whereby the government is interfering in the free market by shifting the collection and remittance of the sales tax will result in increased costs to Florida consumers. Before proceeding with final committee deliberations, NTU urges you to consider the following observations from a fiscal policy perspective.

Florida’s sales tax affects multiple parties in a transaction and electronic payment systems have been developed to effectively accommodate consumers and businesses alike. Currently, that system accounts for the final, total cost of a transaction. It does not parse out local or state sales tax. Only the network sees that total. In an effort to make SB 564 functional, an entirely new payment system would have to be developed in order to tabulate local tax and state tax separately – doubling the number of transactions processed in Florida.

Adding further complication to this intricate issue is whether the technology infrastructure can support such a sweeping change in which sales and use taxes are exempt from interchange fee calculations. Currently, there is not a technological solution available to provide the detail that payment networks and issuers need to validate tax payments for consumer transactions, approve them through payment systems, and calculate fee changes from existing data.

While we acknowledge the well-meaning legislative intent and the importance of consumer affordability, Florida consumers and taxpayers will not be well-served should this become law. By drastically increasing the number of transactions processed, forcing processors to develop alternative systems and software, costs for small businesses and consumers in Florida will undoubtedly increase. This legislation effectively imposes price controls on the financial services industry and increases processing costs, both of which will ultimately reach and harm consumers.

Florida in particular, has historically prioritized achieving real tax relief for taxpayers and small businesses. We applaud your leadership in protecting taxpayers, and growing the state’s economy. In fact, we’d encourage you to consider providing relief to taxpayers by taking a thorough look at reducing the state’s current 6% sales tax. We hope you continue to stand with the taxpayers of Florida and oppose SB 564. Thank you for your time and consideration of NTU’s comments, please reach out should you have any questions.

Leah Vukmir
Vice President of State Affairs

Jessica Ward
Senior Director of State Affairs