Washington, D.C., could be the next jurisdiction to tackle credit card swipe fees.
According to an exclusive from Axios, 13 other states have introduced similar bills, but the fact that this one is in the nation’s capital could bring extra salience to the issue.
Axios reports that D.C. councilmember Charles Allen plans to propose The Fair Swipe Act of 2025, which would require merchants to be charged processing fees excluding sales tax or gratuities from the total.
“Right now, every time you swipe your card, banks and credit card companies add a 2-4% fee – not just from the meal cost, but from the tax and tip, too,” Allen posted on social media. “That adds up to an average of $14,500 a year per DC restaurant—on tips and tax fees alone!”
Allen introduced similar legislation last year as part of a restaurant relief bill, but the swipe fee limits were not included in the final version that passed.
Swipe Fees in Other States
A law banning fees on sales tax and tips passed in Illinois last year. The law is set to take effect in July, making Illinois the first state to exempt taxes and tips from interchange fees.
However, banking and credit union groups have filed a lawsuit against the state of Illinois, leaving the law in limbo. Earlier this month, the U.S. District Court of the Northern District of Illinois declined to issue a preliminary injunction to stop the swipe fee law from applying to credit unions but extended a previous preliminary injunction that banned it from applying to out-of-state banks.
It’s not clear what method Allen’s bill would employ. The Illinois law proposed that customers swipe twice—once for the base cost of the goods and once for taxes and tips. Pennsylvania had considered a proposal under which credit card companies could refund merchants the portion of the fee incurred by sales tax.
Either way, industry experts believe swipe fee laws will not have the intended effect for restaurateurs and other retailers.
“Merchants have the right to not accept payment cards if they don’t want to pay the fee, or they have the opportunity to pass the cost of credit card fees along to their patrons,” said Don Apgar, Director of the Merchant Payments Practice at Javelin Strategy & Research. “If D.C. outlaws card fees, acquirers will no longer service those merchants, and now the merchant won’t be able to accept cards. So where today the merchant has choices, this law takes those choices away.”
