Bill Description: Senate Bill 1293 would impose new regulations on companies that provide credit and debit card processing services.

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Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?

Senate Bill 1293 creates Section 63-3643, Idaho Code, to impose new regulations on companies that provide credit and debit card processing services. Specifically, these companies would be prohibited from charging their normal percentage fee on the portion of a credit or debit card transaction that is a tax. This includes sales and use taxes, hotel and motel room sales taxes, fuel taxes, and cigarette and tobacco product taxes.

These companies would be required to either "deduct the amount of any tax imposed from the calculation of interchange fees specific to each form or type of electronic payment transaction at the time of settlement" or "rebate an amount of interchange fee proportionate to the amount attributable to the tax or fee."

In addition to being a new regulation, this particular mandate ignores the nature of the business being regulated. That some part of a transaction is dedicated to taxes does not change how the transaction is processed. A $100 transaction requires the same resources to process even if $90 of it is a sale and $10 of it is tax. 

Moreover, this regulation would require national payment processors to implement specific calculation or rebate procedures for transactions processed in Idaho, further costing the companies money and possibly disincentivizing them from doing business in the state. 

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