Texas Business Coalition Pushes for Fair Credit Card Transaction Fee Reimbursement

A diverse coalition of Texas business organizations is urging state lawmakers to advance legislation that would modernize how retailers are reimbursed for collecting sales taxes through credit card transactions. The Texas Association of Mexican American Chambers of Commerce (TAMACC) is leading the charge for House Bill 2428, the Fair Business Reimbursement Act, which aims to address long-standing inequities in the state's tax collection process.

Currently, retailers are required to collect sales taxes on behalf of the state while absorbing processing fees that typically range from 2 to 3 percent per transaction. The existing reimbursement rate of 0.5 to 1.75 percent has remained unchanged since an era dominated by cash transactions, creating a significant financial burden for businesses, particularly small and minority-owned enterprises operating on minimal profit margins.

The proposed legislation, authored by Vice Chair Terry Canales, would increase the reimbursement rate to 2.5 percent for credit card and digital transactions. This adjustment would provide meaningful financial relief without reducing the total tax revenue collected by the state. The bill represents a critical update to a system that has not kept pace with modern payment technologies and business realities.

JR Gonzales, Vice Chairman of TAMACC, emphasized the fairness aspect of the proposed legislation, stating that businesses are not seeking a subsidy but rather equitable treatment for their role in tax collection. The initiative draws support from multiple industry associations, including the Texas Hotel & Lodging Association and the Texas Food and Fuel Association, highlighting the broad-based appeal of the proposed reforms.

Notably, more than half of U.S. states already have similar reimbursement models in place, suggesting that Texas's current approach is out of step with national practices. By updating its reimbursement structure, the state could enhance business competitiveness, encourage tax compliance, and provide tangible support to its small and mid-sized business ecosystem.

The proposed bill represents a potential lifeline for businesses that have been disproportionately impacted by outdated fee structures, particularly in the wake of economic challenges posed by recent global events. By addressing these financial inequities, HB 2428 could play a crucial role in supporting Texas's economic recovery and entrepreneurial landscape.