D.C. councilmember seeks to eliminate credit card fees on tips and taxes

In Washington D.C., a significant legislative proposal has emerged aimed at addressing the increasing burden of credit card swipe fees on businesses and consumers. The Fair Swipe Act of 2025, introduced by D.C. Councilmember Charles Allen, seeks to prevent banks and credit card companies from imposing processing fees on sales tax and gratuities, which businesses do not retain. This legislation has arisen amidst growing concerns about the financial impact of interchange fees, which hit a staggering $172 billion in 2023 and contribute to escalating consumer prices—a typical family now faces an additional $1,100 annually due to these fees. The act's proposal reflects growing bipartisan support among local businesses, especially restaurants and retailers, who argue that charging interchange fees on items like sales tax and tips is unjust. Allen emphasizes that there is no rationale for large corporations, such as Visa and Mastercard, to benefit financially from transactions that primarily involve remitting taxes or distributing tips to employees. As credit card use continues to escalate—making up 32% of all payment types—critics of the current fee structure argue that the economic landscape is not only burdensome for small businesses but also misleading for consumers. However, the bill has sparked considerable debate. While many local businesses back the initiative, dissenters, including the Electronic Payment Coalition, describe it as 'bad policy.' The MD/DC Credit Union Association plans a robust opposition campaign as the bill progresses through the legislative process. They highlight potential compliance costs and hefty penalties, which could reach $1,000 for each electronic payment transaction, as significant concerns that undermine the bill's economic rationale. Meanwhile, similar legislative efforts are gaining traction in other states, such as Illinois, where the Interchange Fee Prohibition Act aims to address comparable issues. These movements signal a growing awareness and acknowledgment by lawmakers of the adverse effects of exorbitant processing fees on both businesses and consumers. As discussions continue, it may prompt additional states to consider similar legislation if successful implementations showcase positive outcomes or if public sentiment continues to rally against current credit card fee practices.