House Finance Committee advances bill to bar swipe fees on taxes and tips after hours of testimony

The Colorado House Finance Committee voted 9‑3 to advance House Bill 12‑82 on a favorable recommendation after more than three hours of testimony from restaurant owners, industry groups, banks and credit unions.

Sponsor Rep. Sam Brooks opened the hearing by saying the bill "only addresses one unjustifiable practice and that is charging businesses and consumers swipe fees only on the taxes and tips portion." Proponents argued the change would return millions of dollars a year to small businesses and their workers, while opponents — including state‑chartered banks, credit unions and payment processors — said the measure risks costly litigation and could disrupt payments systems.

The bill would prohibit payment card networks from calculating interchange fees on amounts that represent sales taxes or gratuities, a practice proponents described as a recurring cost applied to dollars that businesses do not keep. Restaurant owners and trade groups urged passage. "Last year alone, my restaurant paid over $61,000 in swipe fees," said Aileen Riley, owner of Coperta in downtown Denver. Brennan Duckett of the National Restaurant Association said estimates show the measure "would save the industry tens of millions of dollars" in Colorado.

Opponents warned the bill would create technical and legal headaches. Brian Yates of the Electronic Transactions Association told the committee a federal court has already preliminarily enjoined parts of a similar Illinois law and cautioned that "if Colorado enacts this bill, it will face legal challenges and waste additional taxpayer money on a law that is unlikely to survive in court." Representatives of Colorado credit unions and banks said state‑chartered institutions could be left at a competitive disadvantage because national and out‑of‑state banks may be exempted from enforcement under federal preemption, a dynamic they said could reduce the bill's intended benefits.

Committee members pressed both sides on how much small businesses would actually save, who would absorb implementation costs and whether the Attorney General's Office had reviewed the legislation. Jeff Reeser of the Department of Law told the panel the office had met with sponsors during drafting and worked to make the bill defensible; he said the office expects it could seek dismissal of the state as an enforcement party if sued, but that "there would be an initial defense" cost and that litigation is possible.

Members debated whether the bill is a state‑level fix for a national market concentrated among a few large card networks. Proponents pointed to similar bills moving in other states and to a patchwork of court rulings in Illinois that they said could be navigated by drafting targeted language. Opponents said the bill could force changes to point‑of‑sale and issuer systems, create a two‑transaction experience for some purchases, and suppress rewards programs or charitable donation processing in unpredictable ways.

After questions and roughly two hours of witness testimony, the committee voted to move the measure to the Committee of the Whole with a favorable recommendation. The roll call recorded nine votes in favor and three opposed. Committee members who voted yes said the bill would protect small businesses and workers; those opposed cited legal and implementation risks.

The bill now moves to the full House Committee of the Whole, where its supporters said they hope further debate and possible amendments will address outstanding technical and legal concerns.

(Notes: direct quotes and numeric figures above are taken from the committee hearing transcript.)