Colorado Senate passes bill to bar interchange fees on sales‑tax amounts; debate centers on exemptions and enforcement

Senator Linstead moved passage of Senate Bill 134, a measure that would bar credit card networks and large issuers from charging percentage‑based interchange fees on the sales‑tax portion of transactions, and the Senate approved the bill after extensive floor debate and amendments.

Supporters said the bill addresses what they called an unfair cost borne by merchants and passed through to consumers. "In 2024 alone, Colorado businesses paid more than $217,000,000 in swipe fees just on sales tax," Senator Linstead said, arguing that such fees are “money that never belonged to those businesses in the first place." Senator Jota, co‑prime sponsor, added that "sales tax data can already be transmitted through existing credit card systems using what they call type 2 data" and described multiple compliance options for merchants and networks.

Opponents questioned implementation and equity. Senators pressed how exemptions — including a $60 billion asset threshold for banks and credit unions — would be applied and whether the state could or should police how large employers use any resulting savings. An amendment (L31) requiring large retail employers with more than 500 employees to apply savings to lower prices or employee wages prompted repeated floor questions about verification and enforcement; sponsors said the Department of Revenue and other tools would be used for identification and compliance discussions but that a mix of amendments represented a negotiated compromise.

Floor debate also addressed a federal rule from the Office of the Comptroller of the Currency and litigation in other states. Senator Jota characterized those concerns as narrow: "SB134 is narrowly targeted at credit card networks and their ability to charge interchange fees on taxes collected," and noted that the bill exempts community‑chartered banks and credit unions to address industry concerns.

The Senate adopted a series of amendments including L29 (extending the effective date to Jan. 1, 2028), L31 (the large‑employer savings requirement), and L33 (definitional clarifications about parent companies), and then passed the bill on the floor. Sponsors said the measure would return hundreds of millions to Colorado businesses and consumers; critics warned it could create new compliance costs, carve outs that favor some businesses or banks, and invite litigation. The bill was ordered engrossed and placed on the calendar for final passage according to the committee report.