Monroeville, PA – State Senator Nick Pisciottano (D-Allegheny) announced today that he has circulated a co-sponsorship memo for legislation to prohibit credit card companies from charging swipe fees on the sales tax portion of retail transactions in Pennsylvania.
Currently, credit card companies charge merchants interchange, or “swipe,” fees on the full transaction amount, including the sales tax businesses are required to collect on behalf of the Commonwealth. At 2 percent to 4 percent per transaction, those fees add up quickly for small businesses operating on thin profit margins.
“Small businesses are being charged a fee on collecting tax dollars they don’t even keep,” Pisciottano said. “When a family spends $100 at a restaurant and pays $6 in sales tax, the business must send that $6 to the state. Yet the credit card company charges its fee on the full $106. That’s just not fair.”
According to the Federal Reserve, approximately one-third of all purchases in the United States are made by credit card. Visa and Mastercard control more than 80 to 85 percent of the credit card market, leaving merchants with little leverage to negotiate fees. Pennsylvania businesses are estimated to pay hundreds of millions of dollars annually in swipe fees, costs that are often passed on to consumers through higher prices or absorbed by small businesses themselves.
The legislation would prohibit swipe fees from being assessed on the sales tax portion of a transaction. Purchases not subject to sales tax would not be affected.
A broad coalition of business organizations supports the companion House legislation sponsored by State Representatives Pat Gallagher, Steve Samuelson, and Greg Scott, including the Pennsylvania Food Merchants Association, Pennsylvania Retailers’ Association, Pennsylvania Restaurant & Lodging Association, Malt Beverage Distributors Association of Pennsylvania, Pennsylvania Petroleum Association, PA Tavern Association, Pennsylvania Distillers Guild, and the National Association of Convenience Stores.
Senator Pisciottano emphasized that this is a narrowly tailored, common-sense reform to support small businesses, protect consumers, and help ease inflationary pressure by keeping more money in local communities.
“This legislation will help cut costs for Pennsylvania businesses and consumers,” Senator Pisciottano added. “At a time when families and small businesses are feeling the pressure of rising costs, we should not allow credit card companies to profit off Pennsylvania’s sales tax.”
Senator Pisciottano is encouraging his colleagues to join him in supporting this effort to cut costs for small businesses and consumers.