Receipts received by credit card processors

# (a)

For purposes of this Part, the following definitions shall apply:

# (1)

Credit card processor means an entity, whether it is a corporation or an unincorporated entity, that derives 50% or more of its gross receipts from any or all of the following: credit card authorization processing, clearing processing, settlement processing, and volume-based activities. In the case of a combined report, whether an entity is a credit card processor is determined on a corporation-by-corporation basis. The apportionment rules described in this section and section 210-A(5)(c)(4) shall apply only to those receipts generated by the entities in the combined report that qualify as credit card processors.

# (2)

Authorization processing means the routing of transaction data from a merchant to an acquirer bank or from an acquirer bank to an issuer bank for approval or rejection and the routing of that approval or rejection back to the originating party. Authorization includes the various data enhancement and security services the credit card processor performs on the transaction data during the process of routing the data between the acquirer bank and the issuer bank.

# (3)

Clearing processing means the service of processing of a batch of hundreds or thousands of previously-authorized transactions to determine the net amounts due to or from issuer banks and acquirer banks.

# (4)

Settlement processing means the service of delivering instructions for the actual movement of funds between issuer banks and acquirer banks that reflects the amounts determined to be due to or from each entity during clearing processing.

# (5)

Credit card processor’s network means the hardware and software that enable a credit card processor to facilitate the transfer of financial transaction information to and from issuer banks and acquirer banks and, in the case of a third-party processor, to and from merchants, including by any of the following: receiving, processing, and relaying such financial transaction information.

# (6)

Volume-based activities means services that are charged to customers measured on the dollar volume or number of credit card transactions, but not those activities described elsewhere in this subdivision.

# (7)

Access point means a physical location at which a credit card processor’s customers access or may access the credit card processor’s network.

# (8)

Percent of New York State access points means the number of access points located in New York
State divided by the total number of access points in the United States.

# (9)

Acquirer bank means a financial institution that contracts with merchants to accept payments by credit card.

# (10)

Issuer bank means a financial institution that issues credit cards to account holders.

# (b)

# (1)

Except as provided for in paragraph (2) of this subdivision, the amount of receipts from authorization processing, clearing processing, and settlement processing earned by credit card processors included in New York receipts is the product of all such receipts and the percent of the credit card processor’s New York State access points that could generate receipts subject to this paragraph. All such receipts are included in everywhere receipts.

# (2)

If the credit card processor is a third-party processor and, after exercising due diligence, cannot identify the access points for its authorization, clearing, and settlement processing transactions on behalf of issuer banks or acquirer banks, the amount of receipts from those transactions earned from banks with billing addresses, kept in the normal course of the credit card processor’s operations, in New York State shall be included in New York receipts. All such receipts are included in everywhere receipts.

# (c)

# (1)

Except as provided for in paragraph (2) of this subdivision, the amount of all other receipts, including receipts from volume-based activities, received by credit card processors not specifically addressed in subdivisions (1) through (9) of section 210-A shall be included in New York receipts by multiplying the total amount of such other receipts by the average percentage of:
(i) 8%; and
(ii) the percent of the credit card processor’s New York State access points.

# (2)

If the credit card processor is a third-party processor that uses the provisions of paragraph (2) of subdivision (b) of this section, then the amount of all other receipts, including receipts from volume-based activities, received by such credit card processor not specifically addressed in subdivisions (1) through (9) of section 210-A included in New York receipts shall be determined by multiplying the total amount of such other receipts by the average percentage of:
(i) 8%; and
(ii) the percent of its customers with billing addresses in New York State.

# (d)

If it shall appear that the receipts included in New York receipts pursuant to this section do not accurately reflect the locations where such receipts of the credit card processor are earned because the credit card processor has receipts arising from activities outside of the United States, then the credit card processor is authorized to calculate New York receipts pursuant to this section based on the New York State percentage of total access points, which shall be calculated by dividing the number of access points physically located in New York State by the total number of access points used to generate the receipts being apportioned under this section. The corporation bears the burden of proof to demonstrate that applying the apportionment rules contained in subdivisions (b) and (c) of this section do not result in an accurate apportionment of the receipts subject to the rules in this section within New York State.