Bill Text: IA SSB1134 | 2013-2014 | 85th General Assembly | Introduced

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Bill Title: A study bill for an act relating to electronic payment transactions by prohibiting the collection of interchange fees on specified taxes and fees, providing penalties, and including applicability provisions.

Spectrum: Unknown

Status: (N/A - Dead) 2013-02-11 - Ways and Means: Petersen Chair,Bolkcom, and Chapman. [SSB1134 Detail]

Download: Iowa-2013-SSB1134-Introduced.html

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Senate Study Bill 1134 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON BOLKCOM)
A BILL FOR
An Act relating to electronic payment transactions by
prohibiting the collection of interchange fees on specified
taxes and fees, providing penalties, and including
applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. NEW SECTION . 424A.1 Definitions.
As used in this chapter, unless the context otherwise
requires:
1. “Electronic payment transaction” means a transaction
in which a person uses a debit card, credit card, or other
payment code or device, issued or approved through a payment
card network to debit an asset account or use a line of
credit, whether authorization is based on signature, personal
identification number, or other means.
2. “Interchange fee” means any 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.
3. “Issuer” means any person who issues a debit card or
credit card, or the issuer’s agent.
4. “Payment card network” means an entity that directly,
or through licensed members, processors, or agents, provides
the proprietary services, infrastructure, and software that
route information and data to conduct debit card or credit
card transaction authorization, clearance, and settlement, and
that a merchant or seller uses in order to accept as a form of
payment a brand of debit card, credit card, or other device
that may be used to carry out debit or credit transactions.
5. “Settlement” means the transfer of funds from a
customer’s account to a seller or merchant upon electronic
submission of finalized sales transactions to the payment card
network.
Sec. 2. NEW SECTION . 424A.2 Interchange fees —— limitation.
The amount of any tax or fee imposed by state or local
government that is calculated as a percentage of an electronic
payment transaction amount and listed separately on the payment
invoice or other demand for payment, or the amount of any
fuel taxes imposed under chapter 452A, shall be excluded from
the amount of an interchange fee charged for that electronic
payment transaction.
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Sec. 3. NEW SECTION . 424A.3 Circumvention prohibited.
It shall be unlawful to alter or manipulate the computation
and imposition of interchange fees by increasing the rate or
amount of fee applicable to or imposed upon that portion of an
electronic payment transaction not attributable to a state or
local tax or fee to circumvent the effect of section 424A.2.
Sec. 4. NEW SECTION . 424A.4 Deduction or rebate ——
settlement procedure.
A payment card network shall either deduct the amount of
any tax or fee imposed as described in section 424A.2 from the
calculation of interchange fees specific to each form or type
of electronic payment transaction at the time of settlement
or shall rebate an amount of interchange fee proportionate
to the amount attributable to the tax or fee. The deduction
or rebate shall occur at the time of settlement when the
merchant or seller is able to capture and transmit tax or fee
amounts relevant to the sale at the time of sale as part of the
transaction finalization. If the merchant or seller is unable
to capture and transmit tax or fee amounts relevant to the sale
at the time of sale, the payment card network shall accept
proof of tax or fee amounts collected on sales subject to an
interchange fee upon the submission of sales data by the seller
or merchant and shall promptly credit the merchant or seller’s
settlement account.
Sec. 5. NEW SECTION . 424A.5 Enforcement —— penalty.
1. The provisions of this chapter are subject to the powers
and authority of the attorney general or the attorney general’s
designee.
2. If a court finds in an action brought by the attorney
general, or the attorney general’s designee, that a person
has intentionally violated a provision of this chapter, the
person shall be subject to a civil penalty of not less than
one thousand dollars nor more than five thousand dollars for
each violation. In addition, a person paying interchange fees
imposed in violation of this chapter may bring an action at law
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to recover actual damages. The court may order such equitable
relief as it deems necessary, including temporary and permanent
injunctive relief.
Sec. 6. NEW SECTION . 424A.6 Nonseverability.
In the event that any provision of this chapter or its
application is held to be invalid with regard to a federally
chartered bank or other financial institution, it shall be
held equally invalid with regard to a financial institution
licensed by or operating within this state, and to this end the
provisions of this chapter are not severable.
Sec. 7. NEW SECTION . 537C.1 Interchange fees ——
computation.
The computation of an interchange 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, as those terms are defined in section
424A.1, shall be governed by the provisions of chapter 424A.
Sec. 8. APPLICABILITY. This Act is applicable to electronic
payment transactions processed on or after July 1, 2013.
EXPLANATION
This bill prohibits the imposition of interchange fees on
specified portions of electronic payment transactions.
The bill contains several definitions. The bill defines an
“electronic payment transaction” to mean a transaction in which
a person uses a debit card, credit card, or other payment code
or device, issued or approved through a payment card network
to debit an asset account or use a line of credit, whether
authorization is based on signature, personal identification
number, or other means. The bill defines an “interchange fee”
to mean any 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. The
bill defines an “issuer” to mean any person who issues a debit
card, credit card, or the issuer’s agent. The bill defines
“payment card network” to mean an entity that directly, or
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through licensed members, processors, or agents, provides
the proprietary services, infrastructure, and software that
route information and data to conduct debit card or credit
card transaction authorization, clearance, and settlement, and
that a merchant or seller uses in order to accept as a form of
payment a brand of debit card, credit card, or other device
that may be used to carry out debit or credit transactions.
The bill defines “settlement” to mean the transfer of funds
from a customer’s account to a seller or merchant upon
electronic submission of finalized sales transactions to the
payment card network.
The bill provides that the amount of any tax or fee imposed
by state or local government that is calculated as a percentage
of the payment amount and listed separately on the payment
invoice or other demand for payment, or the amount of any
state fuel taxes imposed, shall be excluded from the amount
of an interchange fee charged for the purpose of completing
an electronic payment transaction. The bill provides that it
shall be unlawful to alter or manipulate these provisions by
increasing the rate or amount of fee applicable to or imposed
upon that portion of an electronic payment transaction not
attributable to a state or local tax or fee.
The bill’s provisions are subject to the powers and
authority of the attorney general or the attorney general’s
designee. The bill provides for a civil penalty if a person
has intentionally violated the bill’s provisions of not
less than $1,000 nor more than $5,000 for each violation.
Additionally, the bill provides that a person paying
interchange fees imposed in violation of this chapter may
bring an action at law to recover actual damages, and that the
court may order such equitable relief as it deems necessary,
including temporary and permanent injunctive relief.
The bill specifies procedures for exclusion of taxes or fees
from the computation of interchange fees. The bill provides
that a payment card network shall either deduct the amount
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of any tax or fee from the calculation of interchange fees
specific to each form or type of electronic payment transaction
at the time of settlement, or rebate an amount of interchange
fee proportionate to the amount attributable to the tax or fee.
The bill provides that the deduction or rebate shall occur at
the time of settlement when the merchant or seller is able to
capture and transmit tax or fee amounts relevant to the sale at
the time of sale as part of the transaction finalization. In
the event that the merchant or seller is unable to capture and
transmit tax or fee amounts relevant to the sale at the time of
sale, such as when the tax or fee is collected at the wholesale
level or when a credit or debit card terminal is incapable
of capturing and transmitting tax or fee amounts, the bill
provides that the payment card network shall accept proof of
tax or fee amounts collected on sales subject to an interchange
fee upon the submission of sales data by the seller or merchant
and shall promptly credit the merchant or seller’s settlement
account.
The bill provides that in the event that any provision
contained in the bill or its application is held to be invalid
with regard to a federally chartered bank or other financial
institution, it shall be held equally invalid with regard to a
financial institution licensed by or operating within Iowa.
The bill includes a provision in Title XIII of the Code,
governing commerce, indicating that the computation of an
interchange 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 shall be
governed by the provisions of Code chapter 424A, as created in
the bill.
The bill is applicable to electronic payment transactions
processed on or after July 1, 2013.
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