Credit Card Transaction/Interchange Fees

ISSUE: Should retailers and other sales tax collectors be required to subsidize the state of Florida by paying credit card transaction / interchange fees on sales taxes collected as a part of a credit card purchase transaction.

DISCUSSION: Currently the state of Florida doesn’t authorize a governmental entity to accept credit cards for the payment of taxes or fees without the addition of a “convenience fee” surcharge. This surcharge is imposed to offset the transaction / interchange fees associated with processing the transaction, which guarantees that the governmental entity receives the total amount of the tax or fee, not a discounted amount resulting from the transaction fee assessment. The provision in the credit card companies’ master processing agreement which allows for this treatment, however, does not allow a commercial entity to implement the treatment. A commercial entity may not charge a surcharge to any customer electing to use a credit card instead of cash. Therefore, all commercial credit card transactions are subjected to the transaction / interchange fees, which can be as high as 2.5 percent of the entire amount of the transaction processed, and would include any applicable sales taxes.

When the credit card transaction is settled and funds are distributed to the merchant’s account, the transaction processing fee is subtracted from these funds causing the net distribution to be reduced by the transaction fee charge, usually a percentage of the entire amount of the transaction. When the merchant files his or her sales and use tax return, the entire amount of the sales tax collected on the sale of the item is expected to be remitted to the state even though the sale was made by credit card and discounted by the assessed amount of the transaction processing fee. This results in retailers and other sales tax collectors having to make up the difference between the actual amount of tax dollars collected versus the total amount of tax calculated to be due on the sales transaction. The state receives 100 percent of taxes due even though the retailer only has 97.5 percent of the actual cash received for the tax collection. This situation results in a cash subsidy to the state of Florida on all sales taxes collected as a part of a credit card transaction.

POSITION: The Florida Retail Federation supports legislation that would allow a retailer or other sales tax collector to be held harmless for any credit card transaction fees that may be applied to any sales tax collected as part of a credit card transaction.

Delinquency Fee Increase

ISSUE: Should Florida increase the fee a merchant creditor can collect on a late credit payment.

DISCUSSION: Florida’s credit laws have capped the delinquency fee that merchants are allowed to collect on a late payment. During this time major credit-granting and neighboring states have increased their late fees, creating an incentive for a debtor to pay the out-of-state retail creditor first and the Florida retail creditor later or not at all. This has resulted in Florida businesses, by virtue of the operation of Florida law, being at a disadvantage in collecting rightful bill payments. Retail creditors who opt to operate under Florida’s credit laws do so with a built-in advantage for out-of-state retail lenders in getting their bills paid. The question is often posed as to why Florida credit regulators cannot regulate the out-of-state lenders. Federal law allows each state to set its own credit laws without being subject to other states’ laws. Consumers may more easily qualify for credit from states with laws more friendly to credit operations. A merchant can have retail operations in Florida, yet domicile its credit operations in another state or contract with a credit grantor in another state to manage its credit program. Either way, credit with late fees higher than what Florida law allows is already in the hands of Florida citizens. Again, this puts Florida’s creditors in the position of their bills being paid later or not at all compared with bills from credit grantors in other states.

POSITION: The Florida Retail Federation favors increasing credit delinquency fees to an amount that is competitive with those allowed by other states.

Moratorium On Impact Fees

ISSUE: Should the Legislature adopt a statewide moratorium on impact fees.

DISCUSSION: Growth and development have slowed to a near halt in Florida. The cost of new development is daunting, and impact fees are a significant part of those costs. Many local governments have been proactive, reducing impact fees or putting moratoriums in place in order to encourage development. A statewide moratorium would go even further to defray the cost of development and encourage new construction and business growth throughout Florida.

POSITION: The Florida Retail Federation supports a statewide moratorium on impact fees in order to encourage business growth.

Emergency Declarations

ISSUE: Should declarations of emergency be more narrowly defined.

DISCUSSION: When Florida declares a state of emergency, this triggers state laws that protect Florida’s consumers from price gouging. These laws are in effect in every area that is covered by the declaration, for the duration of the declaration.

In order to avoid being viewed as non-compliant with these laws, many businesses significantly alter their typical and lawful pricing practices in the areas in which an emergency has been declared. When the declarations of emergency are overly broad, encompassing areas of the state that are unlikely to be impacted by an emergency, this creates additional operational challenges and expenses for businesses.

For a major disaster of statewide impact, a sweeping declaration is desirable. However, for the more localized emergency, declarations of emergency can and should be narrowly drawn in order to prevent confusion and instability in the marketplace.

POSITION: The Florida Retail Federation supports declarations of emergency that protect consumers without hindering compliant businesses.