Learn More About SB26-134
SB26-134 legislation addresses the unfair "swipe" fees paid by Colorado businesses to card networks.
In 2024, Coloradans paid $217 million in swipe fees on sales tax, with no market competition to drive down costs. By changing the way these swipe fees are applied to local taxes, this new legislation will bring local businesses like restaurants and other small retailers immediate price relief. Its goal is to prevent merchants from paying interchange fees on sales taxes – money they remit to the state anyway - and to stop networks from avoiding that restriction.
This bill will be enforced by businesses through their contracts, not a traditional private right of action. It sets clear limits on when fees can be applied, ensuring businesses can hold card networks accountable for contract violations. Only directly involved parties can seek enforcement, maintaining fair and targeted accountability.
What Does SB26-134 Do?
End Fees on Sales Taxes: Payment card networks cannot charge swipe fees on the sales tax part of a sale. Swipe fees can only apply to the price of the item, not state or local taxes.
Payment Card Networks: Payment card networks will be required to adjust fee structures to exclude taxes and avoid indirect workarounds.
Merchant: Merchants will see reduced costs by preventing interchange fees from being charged on sales tax amounts.
Clear Enforcement: This new bill creates clear private enforcement mechanisms and financial penalties for noncompliance. Merchants, consumers or other injured parties may bring a civil lawsuit against a payment card network that violates the law.
Who Does SB26-134 Apply To, and How?
Payment Card Networks (Primarily Visa and Mastercard): They will be prohibited from charging percentage-based interchange fees on the sales tax portion of a transaction, and networks would be banned from raising other fees or adjusting rates on the non-tax portion of a transaction to offset lost tax fees.
Merchants & Small Businesses: They will gain directly – by thousands of dollars every month - from reduced credit-card processing costs by eliminating interchange fees on sales tax amounts. This new legislation delivers essential relief to businesses facing mounting operational costs.
Who is Excluded From Direct Regulation?
Small Banks & Debit Card Issuers (under $60 Billion in Assets): Can continue using Visa/Mastercard fee schedules, with the requirement that sales tax is excluded from swipe fees. Exempts every Colorado local/community bank and credit union.
How is This Bill Different From HB25-1282?
While HB25-1282 aimed to restructure how card networks operate in Colorado, SB26-134 is a targeted approach, laser-focused on eliminating hidden fees on sales taxes.
