By: Darby H.B. No. 4124

A BILL TO BE ENTITLED

AN ACT

relating to the charging of swipe fees on certain electronic payment transactions; authorizing a civil penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 12, Business & Commerce Code, is amended by adding Chapter 610 to read as follows:

CHAPTER 610. CHARGING OF SWIPE FEES

Sec. 610.001. DEFINITIONS. In this chapter:

(1) "Assessment fee" means a fee paid to the payment card network for allowing a merchant to use a payment card or other payment code or device in an electronic payment transaction.

(2) "Electronic payment transaction" means a transaction in which a person uses a payment card or other payment code or device issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.

(3) "Gratuity" means a voluntary monetary contribution to an employee from a guest, patron, or customer in connection with services rendered.

(4) "Interchange fee" means a fee charged to a merchant for the purpose of compensating the payment card issuer for the issuer's involvement in an electronic payment transaction.

(5) "Payment card" means a credit card, debit card, check card, or other card that is issued to an authorized user to purchase or obtain goods, services, money, or any other thing of value.

(6) "Payment card issuer" means a lender, including a financial institution, or a merchant that receives applications and issues payment cards to individuals.

(7) "Payment card network" means an entity that directly, or through a licensed member, processor, or agent, 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 an entity 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.

(8) "State or local tax" includes a tax imposed by this state or a unit of local government of this state, including the sales, excise, and use tax, motor fuels tax, hotel occupancy tax, mixed beverage sales tax, and tax imposed on the rental of a motor vehicle, other than a tax returned to a taxpayer in the form of a deduction or discount under Section 151.423 or 151.424, Tax Code.

(9) "Swipe fee" means the interchange fee and, if applicable, the assessment fee.

Sec. 610.002. EXCLUSION OF STATE OR LOCAL TAXES AND GRATUITY FROM SWIPE FEES; MERCHANT DEDUCTION OR REBATE. (a) The amount of state or local tax that is calculated as a percentage of the amount of an electronic payment transaction made in this state and gratuity that is listed separately on a payment invoice or other demand for payment must be excluded from the total amount on which a swipe fee is charged for that transaction.

(b) A payment card network shall with respect to each form or type of electronic payment transaction:

(1) deduct the amount of state or local tax imposed and gratuity from the calculation of swipe fees attributable to the transaction at the time of settlement; or

(2) rebate the merchant an amount equal to the amount of swipe fees attributable to the state or local tax imposed and gratuity on the transaction.

(c) A deduction or rebate under this section must occur at the time of settlement when the merchant is able to capture and transmit state or local tax or fee amounts and gratuity relevant to the sale at the time of sale as part of the transaction finalization. If a merchant is unable to capture and transmit tax or fee and gratuity amounts relevant to the sale at the time of sale, then the payment card network must accept proof of tax or fee amounts and gratuity collected on sales subject to a swipe fee on the submission of sales data by the merchant and provide the rebate no later than 180 days after the date of the electronic payment transaction, and, within 30 days after the merchant submits the sales data.

(d) This section does not create liability for a payment card network regarding the accuracy of the tax or gratuity data reported by the merchant.

(e) It shall be unlawful for a payment card issuer or a payment card network to alter or manipulate the computation and imposition of swipe fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of an electronic payment transaction not attributable to taxes or gratuities to circumvent the effect of this section.

Sec. 610.003. CIVIL PENALTY; RESTITUTION. (a) A person who violates this chapter is liable to this state for a civil penalty in an amount not to exceed $1,000 for each violation.

(b) The attorney general may bring an action to:

(1) recover the civil penalty imposed under this section; or

(2) obtain a temporary or permanent injunction to restrain the violation.

(c) An action under this section may be brought in a district court in:

(1) Travis County; or

(2) a county in which any part of the violation occurs.

(d) The attorney general shall deposit a civil penalty collected under this section in the state treasury to the credit of the general revenue fund.

(e) A person who violates this chapter shall refund a merchant any swipe fees charged in violation of this chapter.

SECTION 2. If any of the provisions of this Act are held invalid, the remainder shall not be affected as a result; nor shall the application of the provision held invalid to persons or circumstances other than those as to which it is held invalid be affected as a result.

SECTION 3. This Act takes effect September 1, 2025.