DENVER — Credit union trade groups are applauding Colorado Gov. Jared Polis for vetoing Senate Bill 26-134, a measure that would have limited interchange, or “swipe,” fees on the sales tax portion of credit and debit card transactions.
In separate statements, both the America’s Credit Unions and the Defense Credit Union Council said the governor’s action prevents disruptions to the payments system and avoids what they described as significant operational and compliance challenges for financial institutions.
The legislation would have prohibited certain payment card networks and large financial institutions from charging interchange fees on the sales tax portion of card transactions. The measure was designed to reduce costs for merchants, who currently pay interchange fees on the full transaction amount, including taxes collected on behalf of state and local governments. The legislation was similar to that which has also appeared in other states, including Illinois, where the legislature recently voted to delay implementation for one year,
Supporters Vs. Opponents
Supporters argued the change would save businesses millions of dollars annually, while opponents contended it would require extensive changes to payment processing systems and could affect fraud prevention efforts, rewards programs and transaction processing.
Troy Stang, president and CEO of the GoWest Credit Union Association, said the veto “protects Colorado consumers from unnecessary disruption and preserves a secure, efficient payments system.”
“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,” Stang said in a statement. He added that the association appreciated Polis’ efforts to understand the perspectives of stakeholders before making his decision.
Principled Stand
Scott Simpson, president and CEO of America’s Credit Unions, said the governor took “a principled stand against this costly and chaotic policy.”
“With ongoing litigation and increasing federal preemption, this would have mired Colorado in years of legal uncertainty and operational chaos while other states moved forward to increase the safety and effectiveness of the payment system,” Simpson said. He added that the organization would continue opposing efforts it believes could disrupt the national payments system.
DCUC: More Than a Change to Interchange
The Defense Credit Union Council, which had urged Polis to reject the measure in a letter last month, said the proposal extended far beyond a simple change to interchange fee calculations.
According to DCUC, the bill would have required changes to transaction settlement processes, tax reconciliation procedures, card identification systems, fee structures and payment dispute processes. The organization argued that the measure effectively imposed operational mandates on payment networks rather than making a narrow pricing adjustment.
Anthony Hernandez, DCUC president and CEO and a retired U.S. Air Force colonel, said the veto reflects “a clear understanding of the complexity and interconnected nature of the payments system.”
Downstream Effects Cited
“We appreciate his leadership in recognizing these concerns and taking action to protect Colorado consumers, small businesses, and the credit unions that serve military and veteran families,” Hernandez said.
DCUC Chief Advocacy Officer Jason Stverak said in the group’s earlier letter that reducing resources available to community-based financial institutions could affect investments in fraud prevention, member service and affordable financial products, impacts that could be felt particularly by military families.
Active Role in Debate
The GoWest Association said Colorado credit unions played an active role during the legislative debate, testifying before lawmakers, participating in advocacy campaigns and engaging with policymakers to explain the potential effects on members and financial institutions. The association said credit unions support efforts to address rising costs for businesses but argued SB 26-134 would have placed consumers and community financial institutions in the middle of a broader dispute over payment system economics without addressing underlying concerns.
