Credit unions are celebrating the seeming demise of Colorado’s swipe fee legislation.
Colorado Gov. Jared Polis on Wednesday (June 3) vetoed a bill that would have reduced the fees businesses pay card companies for each charge they process. State law bases swipe fees on a percentage of a customer’s charge, including sales tax. The vetoed bill would have taken taxes out of the equation.
While supporters said change would protect restaurants and other small businesses, credit unions dubbed the legislation the “Credit Card Chaos Bill” and argued it would have disrupted payment systems and placed extra compliance burdens on credit unions and merchants.
“This veto protects Colorado consumers from unnecessary disruption and preserves a secure, efficient payments system,” Troy Stang, president and CEO of GoWest Credit Union Association, said in a Wednesday news release. “As financial partners to more than 2.8 million Coloradans, credit unions support policies that lower costs and improve financial access for families and small businesses.”
A report on the veto from Colorado Public Radio quoted supporters who argued that it isn’t fair to require businesses to pay fees on money they don’t get to keep, and that the legislation might have saved restaurants and small businesses thousands of dollars per year.
“When a merchant takes a credit card from a consumer and processes that card, they should not have to pay fees on the local or state taxes that they are collecting from that customer,” said Democratic House Speaker Julie McCluskie, one of the bill’s chief sponsors.
McCluskie and other supporters also contended that credit card companies shouldn’t be permitted to profit from local sales tax.
However, Polis ultimately shot down the bill, saying it “presents too much legal risk to Colorado’s business environment and consumers, with limited upside for our small businesses,” the Colorado Public Radio report added.
The news came two days after lawmakers in Illinois agreed to delay implementing a similar law until next year.
The Interchange Fee Prohibition Act (IFPA) prevents banks and credit card companies from instituting interchange fees, another name for swipe fees, on the sales tax and tip portions of credit and debit card transactions.
Signed into law in 2024, the bill was quickly contested in a lawsuit brought by banking and credit union groups.
