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DENVER, CO — The House today passed legislation to save small businesses money by cracking down on excessive card transaction fees that inflate prices for Coloradans. The Swipe Fee Fairness and Consumer Safeguards Act prohibits payment card networks from fixing fees with credit card issuers, bans fees on taxes and tips and creates new accountability measures. HB25-1282 passed the House by a vote of 43-21.
“Every time you swipe your card at a local restaurant or business, major credit card companies are skimming off the top and passing the cost down to small businesses – our bill establishes reasonable swipe fee guidelines that protect consumers and small businesses,” said Rep. William Lindstedt, D-Broomfield. “This bill supports Colorado’s small businesses and restaurants by prohibiting fixed swipe fees, banning swipe fees on taxes and tips and establishing measures designed to level the playing field between card companies and small businesses. Major credit card companies are price matching swipe fees – resulting in Coloradans paying $2 billion in swipe fees each year. This bill is a big step forward to saving our small businesses and restaurants money on credit card transactions.”
HB25-1282, The Swipe Fee Fairness and Consumer Safeguards Act, is also sponsored by Representative Max Brooks, R-Castle Rock. The bill would reduce the "swipe" fees paid by Colorado businesses to credit card networks, also known as interchange fees. This bill would:
Prohibit Fixing Fees: Payment card networks would not be allowed to fix or conspire to fix interchange fees with credit card issuers.
Ban Fees on Taxes and Tips: Interchange fees could not be applied to the portions of a transaction attributable to sales tax or gratuity. This would end the practice of banks unfairly profiting from merchants collecting and remitting taxes to the state.
Protect Consumers: Fees related to disputed transactions would not be charged until disputes are resolved.
Cap Fees on Charitable Donation: Would limit interchange fees on charitable contributions to 0.2-percent for debit cards and 0.3-percent for credit cards.
Crack Down on Bad Actors: Merchants, consumers, or affected entities could sue payment card networks for damages, including treble damages for bad faith conduct.
HB25-1282 aims to support Colorado small businesses by lowering transaction fees and expanding opportunities to negotiate with card companies. Fairer fee practices also means consumers benefit from reduced costs on each transaction and card companies cannot charge disputing fees until the dispute is resolved and consumers are notified in writing.
Coloradans pay $2 billion annually in swipe fees with no market competition to drive down costs. Additionally, Visa and Mastercard control more than 80-percent of the market for credit cards and debit cards. Price matching or fixed swipe fee rates between major card companies means merchants and consumers are paying more for tax and tip on card transactions. This bill would eliminate swipe fees on taxes and tips, cap swipe fees on charitable contributions, prohibit price fixing by card networks, and deliver much-needed relief to small businesses struggling under excessive fees.
Colorado is one of more than seventeen states that are pursuing similar legislation to protect small businesses and fight back against inflated prices.