Removing Barriers Blog

Retailers Continue Payments Push in Hawaii, Massachusetts and Minnesota
Posted March 17, 2016 by CUNA Advocacy

Despite a lack of success, retailers continue to attempt to advance payments bills (those requiring chip-and-PIN and prohibiting interchange fees on some taxes) in the states. Their latest efforts are in Hawaii, Massachusetts and Minnesota and as in the past, we will work with the Leagues to ensure the measures are defeated.

In Hawaii, a resolution, HCR 182, requesting all financial institutions that issue credit or debit cards to Hawaii residents or businesses replace those cards with chip-and-PIN cards and that all Hawaii businesses that accept electronic payments upgrade or replace their point-of-sale terminals to accept payment by chip-and-PIN cards. While the resolution would not require chip-and-PIN it is the first step in passing legislation requiring the technology. Bills requiring chip-and-PIN are pending in New Jersey, A 2800, and New York, A 8620 and A 8415.  A chip-and-PIN study bill, H 4389, is pending carryover in South Carolina as well.

Just yesterday an interchange bill, H 834, harmful to credit unions was passed out of the Massachusetts Joint Committee on Financial Services. The measure would require financial institutions, including credit unions, to provide merchants with credit and debit card rules and a schedules of interchange fees along with an explanation of rates. The bill could be cumbersome to credit unions as they would have to provide new rules and schedules each time they are updated. Additionally, H 834 would prohibit the collection of interchange fees on taxes, which would require credit unions to develop systems to distinguish eligible and ineligible amounts for interchange fee collection, which would be burdensome and expensive for credit unions.

A bill prohibiting the collection of interchange fees solely on nonfederal taxes, H 3027, was introduced this week in Minnesota. This bill is similar to unsuccessful legislation introduced in Arkansas, Colorado and Nebraska last session. Like the aforementioned Massachusetts bill, if this bill were enacted, credit unions would face increased burdens and expenses. Last session’s legislation was rejected in part due to the potential loss of sales tax revenue, legal deficiencies and operational hurdles.