As the legal landscape shifts around them and a national fight increasingly spills into the states, Massachusetts lawmakers are hoping that business groups, banks, credit card companies, and payment processors will help them cut a path through the thicket of credit card swipe fees.
In a 2024 economic development law, Massachusetts created a special legislative commission to study the future of payments and sales transactions by credit card and the impacts for small businesses. The group was supposed to issue a report of its findings and recommended legislation by Dec. 31, 2025, but that deadline has since been extended until Dec. 31, 2026.
Business owners say that the post-pandemic rise in the popularity of electronic payment methods has led to a greater number of those transactions being processed. That in turn means the interchange or swipe fees charged for processing a credit or debit card payment add up to billions of dollars annually and have become a burden for small businesses and restaurants in particular.
The banks and financial institutions that collect the fees that average 2.1 percent nationally say that money is used to fund things like fraud prevention and cybersecurity that benefit the businesses paying the fees. Consumer advocates say the added costs are often passed on to customers, even if indirectly.
Businesses across the country paid a record $198.25 billion in swipe fees in 2025, according to the trade publication Nilson Report, up about 80 percent since the pandemic and driving up prices for the average household by almost $1,200. President Trump has weighed in on the trend, referring to it in a January posting on Truth Social as “the out of control Swipe Fee ripoff.”
Led by Financial Services Committee co-chairs state Representative James Murphy of Weymouth and state Senator Paul Feeney of Foxborough, the commission held its fourth hearing to accept testimony Monday, plans to hold additional hearings, and is accepting written testimony until July 31.
Since the commission’s hearings got underway, the national context for its work has changed.
In early June, a federal judge issued an injunction blocking implementation of a 2024 Illinois law that sought to make it the first state to ban interchange or swipe fees from being levied on the tax and gratuity portions of a bill. Colorado was the second state after Illinois to pursue that approach, and lawmakers there passed a bill in May to ban swipe fees on the tax portion of a transaction.
But the judge’s ruling on the Illinois law came while the Colorado bill was pending on Governor Jared Polis’s desk, and the Democrat cited that ruling when he vetoed it, Pluribus reported this month. Polis wrote that “it is quite possible this bill would never go into effect” and that “even if the bill were to survive legal scrutiny and go into effect in our state, it is questionable whether this bill is fully implementable or operationally feasible” as a state-specific carve-out from the global integrated payments system.
The Illinois law and injunction against its implementation came up repeatedly during Monday’s hearing, during which the commission heard from representatives of the National Retail Federation, the Electronic Payment Coalition, the Electronic Transactions Association, Capital One, and others.
After about 90 minutes of testimony, Murphy made clear that he was interested in moving on from anecdotes and stats and would like to see all the groups with a vested interest in the issue come forward with “any possible solutions or middle grounds or recommendations … rather than have the Legislature come up with a report that maybe ends up being a bill that’s filed or a recommendation made by us.”
The Retailers Association of Massachusetts, which is represented on the commission by senior vice president Bill Rennie, said the push for swipe fee reform has been playing out for years in Washington, D.C., but “the battle is increasingly moving to the states.” RAM proposes that Massachusetts allow merchants to pass on the processing costs to the credit card purchaser, follow Illinois’s lead and eliminate interchange fees on taxes and tips, and clearly spell out the rights of merchants and consumers when facing or disputing a credit card chargeback.
In January, Democratic senators on the Committee on Consumer Protection advanced legislation (S 2819) that would allow sellers to charge customers paying with a credit card a fee of up to an amount equal to the seller’s cost to process the payment. It also requires sellers to notify customers of the credit card surcharge. Similar bills were sent to study by House committee rosters this session.
Massachusetts is one of just a handful of states that does not allow businesses to surcharge customers for paying with electronic means.
There is at least one closely related bill that appears still active this term: Senate Majority Leader Cindy Creem has a bill (S 688) that she says is “based on an Illinois law” and would prohibit interchange fees from being applied to the tax or gratuity portion of a payment. That bill got a hearing before the Financial Services Committee that Murphy and Feeney chair in October and the panel in April sought an extension until May 4.
The committee took no action on the bill by then, but legislative records show that Feeney filed an order (S 3081) on that date to further extend the committee’s deadline until July 31. The Senate has not taken that extension order up.
