Picture this: you’re at a café, grabbing lunch with a friend. You swipe your rewards credit card to cover the bill—meal, tax, and a well-earned tip for your server. It’s convenient, secure, and maybe even earns you a few points toward your next vacation. However, behind the scenes, a bill moving through the state legislature that could upend that simple transaction and make it more difficult for everyday people to access credit.

This proposal may sound harmless. It proposes to ban banks and credit card companies from collecting “interchange fees” on the portion of a transaction that covers taxes and gratuities. At first glance, this may appear to be a win for small businesses or consumers. But as with many good-sounding government interventions, the unintended consequences tell a very different story.

Let’s start with the basics. Interchange fees, also known as swipe fees, are the fees that merchants pay to banks for processing card transactions. These fees support the infrastructure that ensures digital payments are safe and reliable. They cover things like fraud protection, transaction networks, and even the rewards you enjoy from using your card. In essence, interchange fees keep the wheels of the credit system turning.

State legislation that is popping up all over the country would carve out a portion of those fees by banning banks from collecting them on taxes and tips. Sounds simple—but the effect isn’t. What this bill does is impose a targeted price control on a functioning part of the market. And history has taught us time and again: price controls don’t lower costs—they shift them, often to the folks least able to afford them.

So, who gets hit first? Community banks and credit unions, like those in Louisiana, rely on interchange revenue to offer services with low or no fees. If that revenue is squeezed, smaller financial institutions—already burdened by heavy federal regulation—may have to pull back on the very credit products that help working families stay afloat. That means fewer card approvals, smaller credit lines, and reduced access to the rewards and protections that come with using a card.

Next in line? The consumer. Banks could offset the lost revenue from interchange fees by eliminating free checking accounts, reducing card benefits, or introducing new service fees. Sound familiar? Following the federal Durbin Amendment’s 2010 cap on debit card interchange fees, studies revealed that free checking accounts declined sharply and rewards programs disappeared. What was framed as a policy to help consumers ended up costing them more out of pocket.

And let’s not forget the very people these bills claim to help—small businesses. If consumers lose rewards or face higher fees, they may opt out of using cards altogether, resulting in lower sales for retailers. In addition, businesses will now have to navigate complex point-of-sale rules regarding the separation of taxes and tips—a compliance headache for any local shop.

This isn’t just theoretical. In Illinois, a similar law passed in 2023 was quickly met with legal challenges and warnings from industry experts. The cost and complexity of implementing these changes, especially for small players, proved to be a real burden. And the result? Confusion, lawsuits, and no meaningful savings for consumers or businesses.

What this legislation ultimately represents is a solution in search of a problem. There’s no evidence that interchange fees on taxes and tips are harming consumers in Louisiana or anywhere else. The thriving credit market has made it easier than ever for families to manage cash flow, build credit, and earn rewards. Restricting this system with arbitrary price controls won’t improve it—it will weaken it.

Lawmakers should ask: Who really benefits from this policy? It’s not the corner store owner in Monroe. It’s not the single mom in New Orleans managing her budget with a cashback card. And it’s not the local credit union offering no-fee cards to its members. In reality, the only winners here are the special interests pushing for the government to distort market pricing for their advantage.

If we want to help families in Louisiana and across the country, let’s champion policies that expand access, encourage financial literacy, and foster innovation in the payments space. Let banks compete. Let consumers choose. And let the free market work without government micromanaging your wallet.

Price controls may sound nice. But freedom—especially financial freedom—is what truly empowers us.