HARRISBURG, Penn.–Pennsylvania lawmakers are considering legislation to prevent credit card companies from charging swipe fees on the sales tax portion of transactions, and have drawn opposition from banks and credit unions in the process.
“The cost is one of the things that a merchant has to struggle with a thin profit margin,” said Rep. Steve Samuelson (D-Bethlehem) in a statement. “They’re trying to hold down costs for competition, but they have rising costs on the front end, so they’re in a tight spot and it leads to higher costs for the consumers.”
However, according to WGAL, some Republicans on the House Finance Committee argued that the legislation would merely shift the costs of doing business to banks and other financial institutions.
Rep. Tom Kutz (R-Middlesex Township), told the news outlet, “What you’re proposing is actually in this case, is going to be harmful to smaller financial institutions like community banks and credit unions, who actually are ones who finance the community projects that we want.”
Retailers, FIs on Opposite Sides
While the Pennsylvania Food Merchants Association has lined up behind the bill, bank and credit union organizations, just like at the national level, are strongly pushing back.
“This legislation would disrupt a payment system that works — raising costs, reducing competition, and placing new burdens squarely on the backs of small businesses and consumers,” Duncan Campbell, president/CEO of the PA Bankers Association, said in a statement. “By carving out Pennsylvania from the global payments network, it risks siphoning investment out of local communities and making life less affordable and more inconvenient for families and small businesses.”
Banks and CUs said many small businesses will be forced to spend thousands of dollars upgrading point-of-sale systems, if they can afford to, and rework their accounting practices. This could include running separate transactions for the cost of goods and sales tax or collecting sales tax by cash or check.
The CU Response
Opponents also said passage of the law could turn Pennsylvania into an “island” when it comes to payments.
“Interchange is what makes secure electronic payments and consumer rewards possible,” Patrick Conway, president/CEO of CrossState Credit Union Association said in a statement. “If interchange is reduced, as this measure proposes, consumers will feel it directly — in their wallets and in their loss of convenience and privacy — while undermining the investments credit unions make in the communities they serve.”
