The unique nature of payment system arrangements distinguishes payment card processing companies from other taxpayers. Due to the unique nature of payment card processing companies' activities related to interchange fees and network fees, the legislature intends to address the business and occupation taxation of payment card processing companies' activities on a prospective basis only, specifically for this industry through the deduction authorized in this act.
This section adds a new section to an existing chapter 82.04. Here is the modified chapter for context.
In computing the tax under this chapter, a payment card processing company may deduct from the measure of the tax amounts received by persons other than the payment card processing company in the following forms:
Interchange fees; and
Network fees.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Interchange fee" means a fee set by a payment network, or by agreement between an issuing bank and a merchant or merchant bank, that an issuing bank retains from the amounts settled to the merchant as compensation for the services the issuing bank provides in issuing a credit, debit, or prepaid card to a cardholder, advancing proceeds to settle a credit, debit, or prepaid card transaction, and incurring a portion of the risks relating to the transaction.
"Issuing bank" means a bank that issues payment network-branded credit, debit, or prepaid cards to cardholders.
"Merchant bank" means a bank that is a participant in payment networks that contracts, directly or indirectly, with a merchant, enabling that merchant to accept a payment network‐branded credit, debit, or prepaid card and receive cash proceeds from the sale.
"Network fees" means fees a payment network charges and receives as compensation for its services, including for facilitating the payment of a credit, debit, or prepaid card transaction from cardholders to a merchant through its network.
"Payment card processing company" means a company, including a merchant bank, that acquires, either directly or indirectly, credit, debit, or prepaid card transactions from merchants, facilitates the submission of those transactions to payment networks, and facilitates the payment of proceeds of those transactions to merchants.
"Payment network" means an operator of a system or network connecting one or more issuing banks to one or more merchant banks that facilitates financial transactions through the use of a credit, debit, or prepaid product.
RCW 82.32.805 and 82.32.808 do not apply to this act.