Swipe Fee Showdown

Lawmakers in over a dozen states are targeting interchange fees on sales tax and tips, while digital payments gain more ground against checks. Plus, a look at how mobile wallets and payment apps are being used in everyday life.

Welcome to Today in Payments. I’m your host, Patti Murphy, here with your weekly dose of payments notes.

Banning Interchange on Sales Tax and Tips

It started in Illinois, but now lawmakers in 11 states are weighing legislation that would ban interchange fees on sales tax and tips.

According to the Electronic Transactions Association (ETA), California, Colorado, Nevada, Texas, and Vermont are considering bills that carry the highest threat of enactment. Colorado has already passed a bill—the Swipe Fee Fairness and Consumer Safeguards Act.

ETA also reports that lawmakers in 10 other states have effectively shelved similar proposals so far this year. Most of those bills are still in early discussion stages.

An added twist to Colorado’s legislation: it also limits interchange fees on charitable contributions.

Meanwhile, in Illinois, a federal judge issued a preliminary injunction on the Interchange Fee Prohibition Act. This blocks enforcement for national and state banks not based in Illinois, as well as for federal savings associations—effectively exempting about 90% of card transactions in the state.

Checks Not Going Away (Yet)

With the stroke of a pen, President Trump has ordered the federal government to stop issuing paper checks. But don’t expect checks to vanish entirely—at least not yet. Exceptions to the order include:

• Individuals without banking or electronic payment access (roughly 3–4% of the population)

• Certain emergency payments, such as disaster relief

• Specific law enforcement activities

So what does this mean for the private sector? Maybe nothing right away—but change is coming.

In a recent PYMNTS.com interview, Holly Tennent, Director of B2B Payments Automation at Bank of America, drew a compelling analogy. She compared accounts payable automation to consumer trends like curbside pickup, which exploded in popularity during the pandemic. Her point? Instant, digital convenience is now expected—by businesses and consumers alike.

Tennent noted that while the technology is there, adoption still lags. Top concerns for companies include:

• Straining internal teams

• Fraud mitigation

• Cost control

• Overall process efficiency

Checks may not disappear overnight, Tennent said, but as younger AP leaders—those raised on tech—move into decision-making roles, automation and integration will become the new norm.

Mobile Wallets vs. Payment Apps: A Matter of Use Case

A recent survey by disbursement platform Onbe reveals an interesting divide in how consumers use mobile wallets and payment apps.

Mobile wallets (like Apple Pay or Google Wallet) are the go-to for:

• Fast-casual restaurants (think Chipotle or Five Guys)

• Fuel payments

• In-person retail

• Entertainment venues

Payment apps (like Venmo or Cash App) dominate for:

• Peer-to-peer payments

• Online shopping

• Paying service providers (like babysitters or handymen)

The data also shows mobile wallet usage is growing, especially among younger consumers:

• Among 18–24-year-olds, weekly use jumped from 26% to 44%

• In the 25–34 group, use increased from 37% to 44%

• Among those aged 35–44, use rose from 37% to 45%

These trends suggest that while one size doesn’t fit all in payments, convenience is king across the board.

That’s all for Today in Payments. Stay tuned for your weekly dose of payments notes.