Page 15 - Advocacy Playbook

Handout

Interchange

THE ISSUE:

A national chain convenience store's proposed bill would prohibit financial institutions
from charging an interchange fee on the tax portion of a sale (i.e., sales tax, gas tax,
local option tax, etc.) Interchange is the fee retailers pay to transmit their payments
electronically.

Systems don't 4 Hurts small

1support it retailers
When a retailer makes a sale using Merchants will need specialized
a customer’s electronic payment 5 terminals and software to itemize
card, the systems that process the REASONS and communicate segmented data
transaction recognize only the to the card networks at the time of
final purchase amount. U.S. IT WON’T sale. Small retailers do not have
infrastructure does not support a sufficient volume to offset the costs
system where multiple amounts WORK the new systems would impose.
(taxes) can be excluded from the
interchange fee.

New systems Consumers lose
are costly to business convenience

Because the structure to support Fraud/credit If the bill passes, the best solution
risk remains
for the problems created would be
this proposal does not exist, it to require consumers to pay in two
would impose severe and costly The financial institution must transactions — one for the sale of
burdens on all businesses, advance the total funds, including the product or service and another
Including retailers. the tax portion, to the retailer for the tax portion of the sale, or to
regardless if the transaction is pay the tax with cash or check.
collectable.

THE BOTTOM LINE:

If passed, this bill would make Colorado an island in the nationwide payment system. The
infrastructure this bill requires does not exist, and it is uncertain if the many businesses involved in
the electronic transfer of money, many of which are not located here, would even have to support

the requirements of a Colorado law — and if so, at what cost? With all of the different tax iterations
that exist around the country, imagine the mess it would create.

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