Creates the interchange fee restriction act prohibiting interchange fees on sales and use tax or excise tax when payment is made with a credit or debit card.

Plain-English Summary

When you pay for something with a credit or debit card, banks and card networks (like Visa or Mastercard) charge the merchant a small percentage fee on the total transaction amount — this is called an interchange fee. Right now, that fee applies to the *entire* purchase price, including any sales tax, excise tax, or other government-imposed taxes built into the total. This bill, called the Interchange Fee Restriction Act, would prohibit those interchange fees from being charged on the portion of a payment that represents state sales tax, use tax, or excise tax.

In practical terms, the bill targets a financial arrangement that many merchants find frustrating: they are essentially paying a processing fee on money they collect *on behalf of the government* — money they never actually keep. Under this bill, card networks and banks would be required to separate the tax portion of a transaction and not charge interchange fees on that amount when a customer pays by credit or debit card in Rhode Island.

This bill would most directly affect retailers, restaurants, gas stations, and other businesses that collect taxes at the point of sale, potentially reducing their card processing costs. It could also affect banks and card networks, who would collect slightly less in processing fees. Whether any savings would be passed along to consumers in the form of lower prices would depend on individual businesses.

The bill was introduced in the Rhode Island Senate and referred to the Senate Commerce Committee, which has recommended it be held for further study — meaning it has not yet advanced toward a vote.