North Carolina HB 650: No Interchange Fees on Sales Tax or Tips.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 650

Short Title: No Interchange Fees on Sales Tax or Tips. (Public)
Sponsors: Representatives Howard, Setzer, and N. Jackson (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Finance, if favorable, Rules, Calendar, and Operations of the House
April 2, 2025
*H650-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO PROHIBIT INTERCHANGE FEES ON SALES TAX OR GRATUITIES. 2
The General Assembly of North Carolina enacts: 3
SECTION 1. Chapter 66 of the General Statutes is amended by adding a new Article 4
to read: 5
"Article 52. 6
"No Interchange Fees on Sales Tax or Gratuities. 7
"§ 66-511. Definitions. 8
In this Article, the following definitions apply: 9
(1) Acquirer bank. – A member of a payment card network that contracts with a 10
merchant for the settlement of electronic payment transactions, whether 11
directly with merchants or indirectly through a processor. 12
(2) Authorization. – The process through which a merchant requests approval for 13
an electronic payment transaction from the issuer. 14
(3) Clearance. – The process of transmitting final transaction data from a 15
merchant to an issuer for posting to the cardholder's account and the 16
calculation of fees and charges, including interchange fees, that apply to the 17
issuer and the merchant. 18
(4) Covered credit card issuer. – A credit card issuer that, together with any 19
affiliates, had consolidated worldwide banking and nonbanking assets, 20
including assets of affiliates, other than trust assets under management, of 21
more than eighty-five billion dollars ($85,000,000,000) at any point during 22
the previous calendar year. 23
(5) Credit card. – A card, plate, coupon book, or other credit device existing for 24
the purpose of obtaining money, property, labor, or services on credit. 25
(6) Debit card. – A card or other payment code or device issued or approved for 26
use through a payment card network to debit an asset account, regardless of 27
the purpose for which the account is established, whether authorization is 28
based on a signature, a personal identification number, or other means. The 29
term includes a general-use prepaid card, as defined in 15 U.S.C. § 1693l-1. 30
The term does not include paper checks. 31
(7) Electronic payment transaction. – A transaction in which a person uses a debit 32
card, a credit card, or other payment code or device issued or approved 33
through a payment card network to debit a deposit account or use a line of 34

General Assembly Of North Carolina Session 2025
Page 2 House Bill 650-First Edition
credit, whether authorization is based on a signature, a personal identification 1
number, or other means. 2
(8) Gratuity. – A voluntary monetary contribution to an employee from a guest, 3
patron, or customer in connection with services rendered. 4
(9) Interchange fee. – A fee established, charged, or received by a payment card 5
network for the purpose of compensating the issuer for its involvement in an 6
electronic payment transaction. 7
(10) Issuer. – A person issuing a debit card or credit card. 8
(11) Merchant. – A person that accepts electronic payment transactions and 9
collects and remits a tax. 10
(12) Payment card network. – An entity to which both of the following apply: 11
a. The entity, directly or through licensed members, processors, or 12
agents, provides the proprietary services, infrastructure, and software 13
to route information and data for the purpose of conducting electronic 14
payment transaction authorization, clearance, and settlement. 15
b. A merchant uses the entity to accept as a form of payment a brand of 16
debit card, credit card, or other device that may be used to carry out 17
electronic payment transactions. 18
(13) Person. – Any individual, firm, public or private corporation, government, 19
partnership, association, or any other organization or entity. 20
(14) Processor. – An entity that facilitates, services, processes, or manages the 21
debit or credit authorization, billing, transfer, payment procedures, or 22
settlement with respect to any electronic payment transaction. 23
(15) Settlement. – The process of transmitting sales information to the issuing bank 24
for collection and reimbursement of funds to the merchant and calculating and 25
reporting the net transaction amount to the issuer and merchant for an 26
electronic payment transaction that is cleared. 27
(16) Tax. – Any use and occupation tax or excise tax imposed by the State or a unit 28
of local government in the State. 29
(17) Tax documentation. – Documentation, such as invoices, receipts, journals, 30
ledgers, and tax returns filed with the Department of Revenue or local taxing 31
authorities, that is sufficient for a payment card network to determine the total 32
amount of an electronic payment transaction and the tax or gratuity amount of 33
the transaction. Tax documentation may be r