A new legislative proposal, Council Bill 260138, is making waves in the District of Columbia as it seeks to regulate interchange fees on electronic payment transactions. Introduced on March 5, 2025, the bill aims to protect merchants from unfair fee increases by payment processors and banks, specifically targeting the manipulation of fees related to taxes and gratuities.

At the heart of the bill is a clear prohibition against issuers, payment card networks, acquirer banks, and processors from altering interchange fees to circumvent the law. If passed, any violation could result in a hefty civil penalty of $1,000 per transaction, alongside a mandate to refund merchants the improperly charged fees. This provision is designed to ensure that merchants are not unfairly penalized for the taxes or gratuities included in their transactions.

The bill has sparked significant debate among stakeholders. Proponents argue that it levels the playing field for small businesses, which often bear the brunt of inflated fees that can eat into their profits. Critics, however, warn that such regulations could lead to unintended consequences, including increased costs for consumers or reduced incentives for payment processors to innovate.

The implications of Council Bill 260138 extend beyond just financial transactions. Economically, it could reshape the landscape for small businesses in D.C., potentially leading to lower operational costs and increased competitiveness. Socially, it may enhance consumer trust in local businesses by ensuring fairer pricing practices.

As the bill moves through the legislative process, its future remains uncertain. Observers are keenly watching for amendments or potential vetoes from the Mayor, which could alter its trajectory. If approved, the bill will undergo a 30-day congressional review before becoming law, marking a significant step in the ongoing conversation about fair business practices in the digital age.