Colorado Should Get Credit Card Reform Across the Finish Line

Colorado lawmakers recently advanced a landmark piece of legislation that would ease costs for the state’s more than 700,000 small businesses. The bill would prohibit major payment networks from charging credit card processing fees on the sales tax portion of a retail transaction.

It’s a major step toward fairness, placing Colorado among a handful of states taking a stand against predatory transaction fees. But the job isn’t finished. As the legislative session winds down, Governor Jared Polis should make sure this reform crosses the finish line.

Credit cards are a staple in our economy, with nearly three in four Americans owning one. But what many consumers don’t realize is that every time they use their card at a store or restaurant like mine, a portion of that sale goes directly to the payment network and issuing bank. Called a “swipe fee,” these hidden charges typically run between 2 and 4 percent of every transaction.

They may seem small on paper, but “swipe fees” add up quickly. Colorado businesses lost more than $2 billion to these charges in 2024. Here at Blue Bonnet Cafe, we paid $72,000 just last year so that our customers could use credit cards. 

While we are allowed to pass these charges along to patrons who pay with plastic, we choose not to. Small businesses and customers shouldn’t have to absorb “swipe fees” when banks are raking in billions of dollars in profit through this scheme.  

Not every business has that option, however. American families lose roughly $1,200 annually thanks to “swipe fee”-related costs embedded in daily purchases. 

Consolidation in the payments arena has allowed this issue to fester. Visa and Mastercard control over 80 percent of credit cards in circulation, granting them duopoly-like control over the market. With so much power at the top, these financial giants can stomp out competitors and set their own “swipe fee” rates. 

And without action, the situation will only get more rotten. 

That’s where leaders in Denver can step in. Senate Bill 134 — which passed the General Assembly last week — would prevent credit-card networks from applying “swipe fees” to the sales tax portion of a transaction. Right now, major credit card companies charge fees as a percentage of the total ring-up price, which includes pass-through costs like taxes and gratuities. 

Eliminating “swipe fees” on sales tax won’t fix everything, but it would add fairness to the current operating environment. Plus, Main Street businesses could preserve some of their earnings. It was estimated that Colorado merchants stand to save roughly $217 million if the legislation is signed into law. 

The banking lobby insists customers will have to pay sales tax in cash if this measure becomes law. But that claim is nothing more than smoke and mirrors. Coloradans will continue to swipe their credit card once. The only thing that changes is how transaction fees are processed behind the scenes. 

Federally, the Credit Card Competition Act offers another avenue for relief. Backed by a bipartisan coalition of leaders including President Donald Trump and Senate Democratic Whip Dick Durbin, the measure would chip away at “swipe fees” by injecting free market competition into the payments sector. 

Specifically, the bill would require banks with over $100 billion in assets to include a second processing network beyond Visa and Mastercard on the credit cards they issue. That would open the door for smaller networks to compete for a merchant’s business by offering lower “swipe fee” rates. If passed, it’s estimated that the Credit Card Competition Act would save businesses and consumers upwards of $17 billion annually. 

Colorado lawmakers have already taken an important step toward strengthening the state’s competitive edge. Now, Governor Polis should finish the job by signing this common-sense reform into law. Curbing “swipe fees” on sales tax would deliver long-overdue relief to small businesses and hardworking Coloradans alike.

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