Texas Business Groups Applaud Sen. Campbell and Rep. Darby for Filing Swipe Fee Fairness Legislation

SB 2026 / HB 4124 aims to save Texas businesses over $1 billion in annual fees that they pay to Wall Street to collect the government’s taxes

AUSTIN, TX (March 11, 2025) - Texans Against Hidden Credit Card Fees, a coalition of small businesses, local merchants and consumers, announced its support for Senate Bill 2026 and House Bill 4124, identical bills introduced by Sen. 2026 and Rep. 4124 respectively. The proposed legislation shields local businesses and consumers from paying exorbitant credit card swipe fees when merchants collect taxes on behalf of the government and tips on behalf of their employees.

“I am proud to introduce House Bill 4124 to eliminate the outrageous phantom tax loophole that has unfairly burdened our small businesses and hardworking consumers for far too long,” said Texas House Rep. Drew Darby (R-San Angelo). “For years, big banks and multinational giant credit card companies have been quietly raking in excessive fees on tips and taxes—hidden costs that ultimately drive-up prices on groceries and everyday services. HB 4124 builds on President Trump's No Tax on Tips initiative by cutting these unfair phantom taxes, ensuring that hard-earned money stays where it belongs: in the pockets of local families and small businesses. I stand with Main Street, not Wall Street, and I am committed to working with Senator Campbell to get this bill across the finish line.”

SB 2026 / HB 4124 seeks to eliminate the practice of credit card companies and banks charging merchants swipe fees based on the total transaction amount, including all taxes and tips that merchants collect but are legally prohibited from keeping. Texas businesses paid over $1 billion in these fees to Wall Street just to collect sales taxes in 2023 alone. This cost disproportionately impacts small and mid-sized businesses, which often operate on narrow profit margins and are already facing economic challenges.

“Swipe fees are among the highest operating expenses for retailers of all sizes across Texas, driving up costs on every consumer,” John McCord, executive director of the Texas Retailers Association, said. “As a general issue of fairness, the least Texas can do to protect main street businesses and consumers from these skyrocketing fees is to ensure they are not applied when merchants are required to collect and remit taxes to the government. We are extremely grateful to Sen. 2026 and Rep. 4124 for prioritizing the needs of Texans over Wall Street with SB 2026 / HB 4124."

Swipe fees, which typically range from 2-5% of a total transaction, represent one of the largest operating costs for many businesses and have risen dramatically in recent years. These fees are substantially higher in the United States than in other industrialized nations, with Americans paying about six times the rate of their European counterparts. By addressing hidden swipe fees for taxes and tips, SB 2026 / HB 4124 aims to reduce costs for businesses and consumers, keeping over $1 billion a year reinvested in our local communities instead of going to Wall Street.

“Small businesses lose money every day collecting taxes for the government and tips for employees, compounding the financial strain they are facing from inflation and narrow profit margins,” Jeff Burdett, state director NFIB Texas, said. “By removing swipe fees from taxes and tips, our state legislators can once again affirm that Texas is the best state to operate a small business because we help entrepreneurs remain competitive and reinvest in their communities.”

Texans Against Hidden Credit Card Fees urges lawmakers to prioritize the passage of SB 2026 / HB 4124 to foster a more equitable business environment and support local enterprises across the state. For additional information about the coalition and its advocacy efforts, visit www.txcreditcardtruth.com.

ABOUT TEXANS AGAINST HIDDEN CREDIT CARD FEES 
Texans Against Hidden Credit Card Fees is a coalition of main street businesses and consumers who are working together to advocate for greater competition, transparency and fairness within Texas’ credit card market. Current member organizations include: Texas Restaurant Association, Texas Consumer Association, Texas Retailers Association, Texas Food & Fuel Association, NFIB Texas, Texas Travel Alliance, Texas Automobile Dealers Association, Texas Hotel & Lodging Association, Texas Package Stores Association, Theatre Owners of Mid-America, Texas Live Events Coalition, Texas Nursery & Landscape Association and Texas Association of Campground Owners.