DENVER — Colorado has become the latest state in which lawmakers are again weighing legislation that would eliminate credit card “swipe fees” on sales taxes, a proposal supporters say could save businesses thousands of dollars annually but which critics—including credit unions–warn could undermine the financial infrastructure that supports electronic payments.
The proposed law would only apply to financial institutions of more than $60 billion in assets, and all credit unions in the state fall below that threshold.
As the CU Daily has been reporting, other states are considering similar legislation, and a court recently upheld a new interchange law in Illinois.
In Colorado, Senate Bill 26-134 would prohibit interchange fees from being applied to the sales tax portion of a transaction. Credit card companies typically charge retailers between 2% and 3% of each credit card purchase when a customer pays with a card, The Gazette reported.
Supporters say the change could offer significant savings to businesses. The Colorado Restaurant Association said a recent survey found restaurants pay an average of about $167,500 annually in swipe fees. Eliminating fees on sales taxes alone could save a restaurant about $26,000 a year, the group said, adding that such savings could determine whether some businesses remain open.
Financial Institutions Respond
The banking industry has raised concerns about reducing interchange fees. In an opinion piece published in Colorado Politics, Colorado Bankers Association Chair Brett Wyss wrote that the fees help fund services such as fraud monitoring, cybersecurity and payment processing infrastructure that allows transactions to clear securely.
The current bill is sponsored by Democratic Sens. William Lindstedt of Broomfield and Iman Jodeh of Aurora. In the House, it is backed by Speaker Julie McCluskie and Majority Leader Monica Duran.
