The Massachusetts State House in Boston. Credit: National Park Service
Credit union advocates are warning Massachusetts lawmakers that a proposal to prohibit interchange fees on the tax and gratuity portions of card transactions could create significant operational and compliance challenges for financial institutions.
During a hearing before the Massachusetts Special Legislative Commission to Study the Future of Payments and Sales, America's Credit Unions Senior Coordinator of State Outreach Alex Vereen testified in opposition to the proposal, which mirrors the controversial Illinois Interchange Fee Prohibition Act.
Vereen, speaking on behalf of the Cooperative Credit Union Association, said the measure would require extensive new compliance systems involving card processors, core providers, statement vendors and merchant data systems that credit unions do not directly control.
"This is not a simple spreadsheet adjustment," Vereen told the commission, warning the proposal could force institutions to track transaction-level tax and gratuity data, manage refund systems and maintain records for audits and disputes.
According to America's Credit Unions' analysis, the proposal would save qualifying small businesses roughly $676 annually, or about $56 per month.
The organization argued those modest savings could come at the expense of broader payment system efficiency and increased costs for credit unions and consumers.
Massachusetts' 125 credit unions originated more than 7,700 business loans totaling $4.1 billion in 2025, including nearly $1 billion in small business lending, according to the group, according to America's Credit Unions.
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