The Texas Comptroller recently released a private letter ruling (provided to the taxpayer on April 29, 2022) concluding that the taxpayer’s payment card management services are nontaxable in Texas. In the ruling, the taxpayer provides a payment card management program that allows services, such as food delivery services, the ability to apply customized spending limits and other controls on debit and prepaid cards used in their businesses. The taxpayer does not issue cards, but works with issuing banks and payment networks to authorize, process, and settle its customers’ transactions. The Comptroller concluded that the taxpayer’s service is a nontaxable electronic payment processing service rather than a taxable data processing service.
