- Key takeaway: Colorado Gov. Jared Polis Wednesday evening vetoed a bill that would bar the collection of interchange fees from credit card companies on taxes, saying the bill as drafted creates too much risk for the state.
- Expert quote: "Ultimately, the bill presents too much legal risk to Colorado's business environment and consumers, with limited upside for our small businesses, for me to be comfortable signing." — Colorado Gov. Jared Polis (D)
- Forward look: The bill's veto comes just as a similar law passed by Illinois in 2024 was rejected by a federal district court judge and the state legislature voted to delay implementation of the Illinois law by a year.
Colorado Gov. Jared Polis, a Democrat, vetoed a bill that would prohibit credit-card issuers from charging interchange fees on the tax portions of transactions, saying the bill would create significant legal risks for the state's consumers and businesses with "limited upside."
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But Polis said there are more meaningful and impactful ways to support the business community than through this legislation. Polis cited the experience of Illinois, which passed a similar bill in 2024, as a cautionary example.
That law, which barred the collection of interchange fees on taxes and tips, has been the source of considerable controversy since it was first passed. The law's implementation date has been
Polis said those developments make it questionable whether the law would go into effect even if he were to sign it, and if it were to succeed he doubted whether the benefits to merchants would outweigh potential inconveniences to consumers and technological challenges for banks and credit card companies.
"It is questionable whether this bill is fully implementable or operationally feasible," Polis said. "This would be a Colorado-specific carve-out to the national and global integrated payments system and it is unclear to me how the state would implement it."
Polis added that he appreciated efforts to exempt small banks and credit unions from the bill, but said that he was told by small banks in the state that because of the nature of the payments system, they would not in practice be exempt from the law. Similarly, Polis said he did not support an amendment to the bill that would direct merchants with more than 500 statewide employees to apply savings from the bill in specific ways.
"I do not believe it is appropriate for the government to direct private entities — no matter their size — how to use their revenues," Polis said. "This provision would also be impossible to enforce and sets a dangerous precedent in state statute."
The move deals another blow to legislative efforts to carve out taxes and tips from interchange fees, an effort driven primarily by retailers and opposed by banks and credit card companies. Banking and credit card groups were praising Polis' decision to veto the bill Thursday morning.
Electronic Transactions Association CEO Jodie Kelley said in a statement that Polis' veto "protects the payment systems Coloradans rely on every day and prevents a policy that would have increased costs and disrupted commerce across the state."
Rebeca Romero Rainey, President and CEO of the Independent Community Bankers of America, also applauded the veto, saying that "these misguided proposals would serve only to drive community banks away from offering credit and debit card services in the communities they serve."
