Fiserv Subsidiary Avoids Washington Taxes on Interchange Fees

A credit card processing subsidiary of Fiserv Inc. isn’t liable for Washington business and occupation taxes on interchange fees because the fees don’t actually accrue to the company, a state appeals court held Thursday.

The win comes after Fiserv secured a legislative victory on the topic. As of Jan. 1, processors may now deduct interchange, network, and other fees retained by banks and card associations from their gross receipts subject to the tax, but are subject to a higher B&O tax rate.

Interchange fees, which issuing banks deduct before funding a customer’s purchase, never make it to the credit card ...