March 12, 2026 · Business, Labor, & Technology · 21,863 words · 23 speakers · 157 segments
We'll call to order the Senate Business, Labor, and Technology Committee. Ms. Chapman, please call the roll.
Senator Catlin. Here. Judah. Liston. Here. Lindstedt. Present.
Madam Chair. Here. Okay, welcome folks. We have one item on the agenda today, Senate Bill 134. when the sponsors are ready, please come to the table and tell us about your measure. Senator Judah.
Thank you, Madam Chair and members of the committee. um senate bill 134 addresses a simple question of fairness should businesses be charged credit card swipe fees on money that was never theirs to begin with when a merchant collects sales tax they are acting as the state's collector yet under the current system card networks and issuing banks take a percentage-based fee on that tax amount as if it were part of the merchant's revenue This legislation simply says taxes should not be subject to interchange fees. To understand the scale of this issue, consider this. In 2024 alone, Colorado businesses paid more than $217 million in swipe fees just on the sales tax portion of the transaction, money that never belonged to them in the first place. For many businesses, swipe fees have quietly become one of the largest operating costs of labor. And that money does not stay here in Colorado. Much of it ultimately flows out of the state to the largest financial institutions in the world. High swipe fees are crushing small businesses and inflating the retail prices consumers pay for groceries, gas, and everything else. This bill takes a targeted approach to solving that problem. some members of the committee may remember that the legislature considered swipe fees legislation last year that proposal addressed several broader issues within the card network ecosystem however the bill before you today is significantly narrower all of those additional provisions were removed this legislation is laser focused on a single issue eliminating interchange fees on sales tax portions of a transaction. The narrower scope was intentional. We listened to concerns about complexities and brought forward a single issue reform designed to address a clear and specific unfairness. Unfortunately, in the weeks leading up to this hearing, we have also seen a number of misleading claims circulating about what the bill actually does. Some of those claims suggest that legislation would somehow harm Colorado community banks or credit unions. Others suggest that it would undermine fraud protection or disrupt the payment system. Those claims simply do not reflect what this bill actually does. At its core, this legislation places reasonable and targeted restraints on Visa and MasterCard's centralized setting of interchange fee rates, specifically when those fees are applied to sales tax dollars being collected by merchants on behalf of the government. To understand why this reform is necessary it helps to look at how the system works today Interchange fees are not determined through normal market competition In the card network system thousands of issuing banks receive the same interchange fees rates because those rates are set centrally by the card networks, primarily Visa and MasterCard. When a card is issued, a merchant pays interchange, excuse me, when a card is used, the merchant pays interchange based on a fee schedule established by those networks and issuing banks receive those standardized rates. that raises a basic question in what other industry do competitors allow a third party to set the fees they all charge so they don't have to compete with each other if merchants tried to band together and let a third party set their prices we all know that would raise immediate antitrust concerns the market structure itself also raises questions two companies visa and mastercard control more than 80 percent of the credit card of the credit and debit card network markets and both operate with profit margins exceeding 50 percent those are extraordinary margins in any industry compare that to colorado businesses you'll hear from today many many operate on margins of under five percent at a time when local businesses are struggling just to stay open, their request is straightforward. Don't charge swipe fees on tax dollars they are only collecting for the state. Now, we may hear concerns that reforms like this will allow, will somehow eliminate credit card rewards or disrupt payment systems, but this bill addresses only the tax portion of a transaction, a relatively small piece of the overall purchase. The underlying purchase amount, which represents the overwhelming majority of the transactions, remain unchanged. In fact, the same card networks operate successfully in places like the European Union, where the credit card interchange fees are capped at roughly 0.3%, far below what merchants pay in the United States, which is often 3% or more. That demonstrates a thriving payment system does not depend on charging fees on tax dollars. It's also worth asking where these fees ultimately go. Much of the $217 million in swipe fees on sales tax that our local businesses pay annually flows directly out of state to giant banks. Those banks' priority isn't investing in Colorado communities. Often, they seem more focused on stock buybacks and increasing shareholder returns on massive profit margins. Visa spent $18 billion on buybacks in 2025 alone, with another $25 billion planned. JPMorgan Chase authorized $50 billion in buybacks, and Capital One authored $16 billion. very little of that money is reinvested in colorado communities meanwhile the small businesses you'll hear from today have told us that even the modest savings from this reform would reinvest would be reinvested in jobs wages local investments and would help merchants avoid having to impose surcharges on their customers the core issue here is simple merchants are required by law to collect sales tax on behalf of the state But when a customer pays with a card the network and issuing banks take a percentage of the entire transaction including the tax portion In other words, merchants are paying higher swipe fees for performing a service of collecting taxes for the government. That is a problem that Senate Bill 134 fixes. With that, I'll turn it over to my co-sponsor, Senator Lindstedt, to explain how the bill works in practice and address some of the concerns that have been raised about its implementation. Senator Lindstedt.
Thank you, Madam Chair, and thank you to my incredible colleague for working on this bill with me. I'm going to walk through the details of how this bill will work and address some of the concerns that I'm sure we're likely to hear today. Before I do that, though, I just want to focus on what we're talking about. When you walk into a business and there's a $10 minimum fee to use a credit card, that's what we're talking about. We're talking about major costs to small local businesses in all of our downtowns across the state, from rural Colorado to urban areas. These swipe fees are huge expenses for those small businesses. I carried a much larger bill last year. It made it through the first chamber, and we hit some roadblocks in the Senate last year. And two things have changed since that attempt. One, district court ruled that this is not preempted by the federal government. That's a huge change. So the folks that were concerned about the legality of it, it went our way in court. Second, during special session, we eliminated the vendor fee remittance that merchants receive. The state used to subsidize some of the cost for collecting and remitting those sales taxes, and we got rid of it because of our budget constraints in the state. Whether it was a good decision or a bad decision, it's what happened, and we need to provide relief to these businesses as a result of that change. So with that, I'm going to briefly walk through how Senate Bill 134 works and address several of the concerns that have been raised about the proposal. First, the bill requires payment networks to ensure that the sales tax portion of a transaction is excluded from any percentage-based fee when calculating interchange fees. The bill provides five distinct ways in which a card network can ensure they are complying with this requirement. They can change their fee rate formulas to ensure that sales tax amounts are subtracted from transaction amounts before a percentage-based fee is applied. Promptly rebate within 30 days interchange fees that are charged on sales tax amounts. If a merchant submits their sales tax information within six months after the transaction is settled, the network can ensure that the merchant gets a rebate for that interchange fee portion. The card network can simply stop using percentage-based fees, or the card networks can stop deducting interchange fees at the time of each transaction and instead charge merchants interchange fees on a regular billing cycle, like a monthly bill, after all tax amounts have been identified and excluded. If the credit card industry thinks that any one of these compliance options is difficult, they have multiple paths to compliance. Enforcement under the bill is focused squarely and exclusively on the payment card networks like Visa and MasterCard. They are the entities that fix the fees and dictate the rules for the system, and if they aren complying with the law they can face lawsuits seeking injunctions and damages No bank or credit union would force enforcement actions under the bill just the networks Visa and MasterCard Now, you've heard a lot of claims suggesting that reforms like this could somehow harm Colorado community banks or credit unions. I want to be clear. The bill's prohibition only applies to interchange fee rates that card networks fix on behalf of the biggest banks in the country. These fees fixed on behalf of banks and credit unions with less than $60 billion in assets. I want to repeat that. You don't see $60 billion in many bills that come forward in the legislature, which includes all but 40 banks and one credit union in the country, meaning everybody else, the community banks, the credit unions, are untouched by this bill. The bill requires no changes from what every other bank and credit union will do in Colorado, except for those 1% of financial institutions. This exemption means that every Colorado-based bank and credit union will be allowed to get higher interchange rates than the top 1% of banks. And if Visa and MasterCard somehow try to penalize or discriminate against those small institutions, the bill allows for legal recourse to make that stop. Another argument we've heard a lot is that interchange fees on sales tax somehow are the only way to fund fraud protection. we're talking about a small percentage of a transaction so this bill does not affect the interchange rates that Visa and MasterCard set for the vast majority of banks and credit unions and there's very little evidence showing that the fees collected on sales tax are used to even prevent fraud prevention we've heard the margins of profit that these companies are making 50% of fraud is assumed by merchants on chargebacks It's not covered by the credit cards. You know, the last thing I want to cover is that the data card networks have is extremely detailed. And we've heard some discussion that somehow they're unable to do this. You know, I think these are some of the largest technology companies in the world, and we would be in a sad state of affairs if they aren't able to calculate sales tax amounts. I think these are sophisticated entities that can handle it. And we know that the card networks already process extremely detailed transaction data and already capture sales tax information within the transaction stream. In fact, they even offer services that package and sell the tax data back to merchants. Executives from the industry themselves have acknowledged that their systems can distinguish tax and tips amounts within transactions. So the question is not whether it can be done. It's simply whether the networks are willing to do it. So with that, I just want to say thank you to everybody that's worked on this bill. We've talked to dozens and dozens of small businesses that are right on the edge of surviving here in Colorado. And this reform is a really straightforward way to give them some relief that they desperately need. I ask for an aye vote. Please listen to the testimony today. We have many experts from our team that can discuss technical aspects of the bill. This is an important bill to vote for your main street in your district over large out-of-state banks that are making money on sales taxes. I think that's wrong, and that's why I'm bringing Senate Bill 134. Thank you both.
We can take questions for the sponsors. Just keep to everyone on the panel today. Keep in mind we have dozens of witnesses, and so if you'd like to ask the sponsors any questions, now's your time. Senator Liston.
I have one question to maybe, I'm not sure who, but what happened to Senator Heinrichson?
Senator Heinrichson has been subbed out for Senator Lindstedt.
And so why did that happen?
I think you can probably take that up with the majority leader if you have a question. Okay. Well, just, I mean, welcome, but, you know, I'm... I think he had either personal or another conflict, so it's not uncommon. Okay. Any questions to the sponsors about the measure? Okay. All right, folks, we're going to move to witness testimony. This is a full room, and I know it's kind of gross and hot in here, guys, So I've asked the sergeants to leave the door open. If there's anything else that we can do to make it less uncomfortable, please let us know. But it's kind of just the way it is, as most of you have been here for quite some time and know that. But I want to welcome folks who are new to this to the room and online. Thank you for participating. This bill has had a lot of activity, and we welcome your testimony. At the request of the sponsors, we're going – And as you all know, we did limit the testimony on the front end to give you plenty of time to kind of prepare your two-minute presentations. And at the request of the sponsors, we're going to have one panel of supporters, and then we're going to move to all of the opposition testimony and then all of the rest of the proponent testimony. I'm going to limit question and answers to five minutes per panel, again, just to keep things on track in a fair way. Okay, let's begin, please. If we could welcome Sonia Riggs, Chris Kennedy, Brennan Duckett, and correct me if I mispronounce your name, Chichi Andasola, who may be a virtual witness. And for the unplanned or, you know, recruited witnesses, we're just going to put them in the last panel, so in the room or online. Is our fourth witness remote? Okay. Is our third witness remote also? All right. I think we'll let the folks in the room begin. Are we sorted with the people online? Can they?
I'm here. I can hear you. This is changing.
We got two online and two in person for this panel. Just one online. Okay, folks. All right. Welcome. We'll go with the in-person folks first. So whoever would like to begin, please introduce yourself. remind the committee who you represent today and we'll begin with your two minutes. Please keep your eye on the stoplight so that I don't have to interrupt you. Welcome.
Madam Chair and members of the committee, thank you for inviting me to testify in support of SB 134. My name is Brennan Duckett and I serve as the Director of Technology and Innovation Policy at the National Restaurant Association. Credit card fees have become the third highest cost for many restaurant operators. Without relief from these rising and non-negotiable fees restaurants will struggle to remain key drivers of local economic activity I want to address several red herring arguments and scare tactics we likely hear from the opposition today First and foremost, the recent federal court decision in Illinois should serve as the green light for any state considering similar legislation. Because Visa and MasterCard centrally price-fix interchange fees on behalf of banks and credit unions, these fees are not protected by national banking law and fall squarely within states regulatory jurisdiction. It is no surprise that the other side filed an appeal after their resounding defeat in court. They have consistently refused to accept any legislative compromise, whether it's the Credit Card Competition Act at the federal level or throughout the extensive negotiations that shaped this bill, the sky will always seem to fall if any reform touches the current system. The opposition also claims SB 134 is unworkable. Yet nearly every point of sale system used by restaurant operators today can already separate and calculate different state and local taxes so operators can meet their legal tax remittance obligations. If a system cannot transmit tax data at the time of settlement, the bill allows operators to submit documentation and receive a refund for interchange fees tied to taxes, a straightforward process similar to existing chargeback procedures today. The bill provides five distinct pathways for network compliance and fully exempts Colorado-based financial institutions. This legislation is workable for all participants in the payment ecosystem and would keep more than $200 million per year in Colorado as opposed to lining the pockets of global card networks and large banks. On behalf of the National Restaurant Association and restaurant operators across Colorado, I urge you to pass SB 134.
Thank you. Perfect timing.
Thank you, Madam Chair and members of the committee. My name is Sonia Riggs. I am the president and CEO of the Colorado Restaurant Association. I'm here today on behalf of our more than 5,000 restaurant members across the state in strong support of Senate Bill 134. Restaurants operate on razor-thin margins. It used to be 3 to 5 percent on average, but now I'm hearing 1 to 2 percent if they are lucky. In fact, 42 percent of restaurant operators said that their establishments were not profitable in 2025. Operators are dealing with rising costs of all kinds, food, labor, rent, insurance, and property taxes, all while dealing with declining customer spending. On top of these pressures, restaurants face an unnecessary burden. Credit card swipe fees on sales taxes. Restaurants provide a service, collecting and remitting tax dollars for government. They don't get to keep this money, but the credit card industry gets to profit from it? It isn't right. Visa and MasterCard reported more than a 50% profit margin last year, and giant banks have 30% profit margins while restaurants are barely surviving. Restaurants are paying an average of $167,000 per year in swipe fees, which translates to higher menu prices, fewer jobs, and stalled growth, if not outright closures. And for consumers, these hidden fees add to the already high cost of dining out. Swipe fees add an average cost of $1,200 per American family per year. This bill offers a simple and fair solution. Remove sales tax from swipe fee calculations. The recent ruling in Illinois shows that this law will stand on strong legal footing while protecting our small businesses from unjust financial practices, and it will provide restaurants in Colorado a lifeline. By supporting this bill, you are standing with Colorado businesses and the restaurants we all enjoy, ensuring that they can keep their doors open, protect more than 250 jobs and continue serving their communities We ask you to please stand with restaurants today and not with Visa and MasterCard Thank you Thank you Madam Chair members of the committee
My name is Joshua Mantel, and I'm the Director of Government Affairs for the Bell Policy Center. The Bell Policy Center provides policymakers, advocates, and the public with reliable resources to create a practical policy agenda that promotes economic mobility for every Coloradan. I'm here to testify in support of SB 134 and want to thank Senators Lindstedt and Judah bringing this bill forward. I testified in support of a similar bill last year and we continue to believe that swipe fee reform policy is right for Colorado. This bill is much narrower than last year, focusing on sales taxes and megacorporations. And while we supported last year's bill, we appreciate the sponsors honing in on the most important aspects of this policy to make sure that we get it right. We should not be allowing corporations to profit off of our sales taxes. While our statewide sales tax is relatively low, we are sixth in the nation in local taxes as a proportion of our tax revenue. It's mostly because our local governments have to increase regressive sales taxes because Tabor doesn't let them use other types of taxes for revenue. Our high local sales taxes should not be propping up these large credit card companies. That's not the point of sales taxes and it's not like businesses see any direct money from sales taxes either. Our taxes are not for the profit of private businesses, period. This will also help consumers, maybe not in a hugely consequential way, but as people across our state or struggling with the increasing cost of living, every little bit does help, and lowering interchange fees will trickle down to consumers and help color-ons. I've been asked more than once, why are you interested in a business versus business policy discussion? And my answer to that is that we see this as a help for small businesses and in a way that doesn't reduce revenue for important programs within our communities or take money out of the hands of workers. We understand and know how hard small businesses are dealing with operating on such small margins because of things like inflation, tariffs, chaotic federal economic policy, and COVID-induced consumer changes. This will help those with small margins continue to survive. Small and local businesses are crucial to the Bell's area of work called wealth building. Starting and maintaining a small business can be an avenue for many to build wealth and create economic mobility for future generations. Thank you again to the sponsors, and we ask for a yes vote on SB 134.
Thank you. Thank you. Okay, our online witness, if you can tune back in, welcome.
Yes, I'm here.
Wonderful. Please proceed with your two minutes.
Thank you, Madam Chair and members of the committee. I would like to start off by saying thank you for having me here to speak today. My name is Chi Chi Andasola, and I'm a small business owner. It's more important now, more than ever, that small businesses are being given the opportunity to be heard and to advocate for themselves, especially at this moment where the ever-mounting challenges of owning, operating, and maintaining a small business seem to multiply daily. My own small business was recently a victim of these challenges. After operating for seven years in the same location in the East Colfax Corridor, it broke our hearts to face the reality that we could no longer keep our business alive, and we closed our doors last September. The Financial Balancing Act of trying to manage rent, overhead, CAM fees, and insurance were only compounded by microaggressions like the credit card swipe fees we are here to discuss today. I paid 4% in these swipe fees on every single transaction, which took thousands of dollars out of my business every month. That may seem like a small drop in the bucket, but to a small business owner, it's an oasis in the desert. There is no such thing as a small amount or pennies on a dollar that doesn help to keep your door open when you are self or own a small business where others depend on your business well to survive Please support this bill. It's targeted and fair and only removes swipe fees from the sales tax portion of transactions. The thousands of local small businesses will make a huge difference. Plus, it's only fair that credit card networks stop benefiting from the Colorado tax system. Please support small businesses and not global card networks by voting yes on this bill. Thank you very much.
Thank you, sir. Okay, committee, are there questions for this panel? Senator Liston.
Thank you, Madam Chair. Ms. Riggs, it's nice to see you. So I'm looking at this sheet that you all put out, which is interesting. Would you elaborate just a little bit? You say here with your flyer that the swipe fees have increased 1.5%,
but then you have the labor has increased 50%. Why has the labor increased 50% and the insurance and utilities have increased 20%? Could you elaborate a little bit on why those huge increases?
Ms. Riggs, and please keep the questions and testimony to the bill, which is about the
bill.
This is their information, Madam Chair.
Thank you, Madam Chair. Thank you, Senator, for that question.
What we were trying to show is that there's a significant number of costs that are increasing with restaurants, and those are obviously some big examples. I will tell you, hearing from restaurateurs that credit card swipe fees has turned into one of the third largest overall fees that they are paying in their restaurant. So in that particular example, it's talking about those specific fees from one restaurant. Well, I will say that is very indicative of what we are seeing across the board. When we did a recent survey to restaurant members in January and February and heard back from a little more than 100 restaurants, On average, they said that's a $142,573 in swipe fees. And if this bill were to pass, that they would save about $26,000 a year on average. So it's not insignificant to restaurants.
Senator Liston.
Okay, so I want to get back to the labor costs because the fact that we've had some big jumps in the minimum wage, would you elaborate on that just a little bit because that would I think would impact your profitability?
Again, we need to keep the – is there anything in the bill that has to do with the minimum wage? Okay.
So we need to keep the conversation to this bill.
as I said, we have a really lengthy list of folks who've come to talk to us about this bill today. Are there questions about this measure for the witnesses?
So they can't answer any question except dealing with swipe fees?
I mean, if you want to take a quick stab at it, but please, folks, like I said,
we have dozens of people who have come to talk to us about this measure,
not something that was passed in 2019.
Then I have another question that's kind of related because the sponsor brought it up. Could you elaborate a little bit? You used to have a vendor fee. The sponsor himself brought that up, that we did away with a vendor fee here in the special session. You all used to get a vendor fee, which was at one time, like 3%, if I'm not mistaken.
So how would that impact your profitability, the fact that the legislature took away the vendor fee?
Do you feel prepared to answer that question?
Anyone on the panel?
In general terms. Okay, Madam Chair, thank you.
Thank you for the question, Senator. Yes, you know, every support, every dollar counts in this industry, and so that certainly has had an impact on the restaurant industry. That being said, as the number of people is declining that go out to eat and people are spending less, certainly they're watching their own pocketbooks, we continue to see the percentage of swipe fees go up. So that is something that has been a significant cost to restaurants and is really weighing heavily. I mean, swipe fees, the fact that a lot of restaurants are saying it's the second or more are saying the third highest, second or third highest cost in their restaurant next to labor and food, that's a pretty significant expense for them.
Thank you. Further questions for this panel?
Senator Lindstedt. Thank you, Madam Chair. I'll just ask one question. Ms. Riggs, thank you so much for being here and for your advocacy for restaurants in our state. Credit card networks have profit margins around 50%. I don't think restaurants are anywhere close to that. Could you just elaborate on what our profit margins are for our current restaurants? Ms. Riggs.
Thank you, Madam Chair. Thank you, Senator Lindstedt, for that question. They used to be an average of 3% to 5% nationwide. We're hearing now 1% to 2% if they're making any money at all. Sadly, I'm hearing from restaurants. I mean, they call us weekly, daily sometimes, crying, saying that the only reason they're in business is because it's going to cost more money for them to break their lease than it will to bleed, slowly bleed. And so many are, it's not uncommon for me to hear restaurants saying they're losing hundreds of thousands of dollars a year, but it would be worse if they broke their lease. It's really heartbreaking, and it's very, very slim margins. I think it's widely known.
Thanks, and that's our time for this panel. So we will welcome the next panel. So, folks, I'm going off of the list that I was given. So if we could please welcome Ben Metzger, Scott Sandberg, Chris Hill, and Katie March. And committee, this is a panel of opposition. Okay, welcome everyone. Who would like to begin? And please remind the committee who you represent today and proceed with your two minutes. I think you need to turn your microphone on. There you go. Go ahead. Welcome.
Madam Chair and members of the committee, my name is Ben Metzger and I serve as in-house counsel and vice president of strategy for Canvas Credit Union. Since 1938, Canvas has been a Colorado state chartered credit union. From Garfield to Denver to Pueblo counties, our focus is entirely on our local communities. I have today two brief points. First, this bill is virtually certain to trigger years of litigation. We have a real-time example, of course, in Illinois. Years after passing similar legislation the law still has not taken effect Instead it tied up in federal court with ongoing appeals and legal costs Passing this bill would not immediately create a new standard It would create years of uncertainty for Colorado businesses, financial institutions, and consumers. Second, the small institution exemption is not workable in practice. The global payment network does not have a local credit union lane. The complex and costly changes required to re-engineer how transactions are processed will impact the entire system. Even if credit unions are technically exempt, we are not exempt from the cost of rebuilding that system or the risk that merchants decide our members' cards are simply too difficult to process. And of course, we've already seen how this plays out. In 2010, the Durbin Amendment included a similar exemption for small financial institutions. It did not function as intended. A 2016 study found that credit unions lost more than $1.1 billion in interchange revenue despite being protected on paper. When the system has degraded our members, the teachers, the first responders, the families of Colorado, they're the ones who ultimately lose. I urge you to vote no on Senate Bill 134.
Thank you. Thank you. Who's next?
Thank you. Madam Chair, members of the committee, thank you for the opportunity to present to you today. My name is Scott Sandberg representing the Colorado Bankers Association, and a group that represents banks employing over 20,000 Coloradans. I am here to oppose this bill because it's unconstitutional and because it imposes severe unintended litigation costs. I'm going to jump right to everything I've heard earlier today about the Illinois case. It is not a huge change. It's not a green light for anything. It was not a resounding defeat, and it does not provide strong legal footing. it provides nothing more than a false sense of security and a roadmap for rejecting the bill. The Illinois court itself, within a year's time, ruled two different ways, enjoining in an injunction from the enforcement of an interchange fee act, and then in the span of about a year, flip-flopping and saying now that it's enforceable. But behind all the drama, the court was very careful and basically stated that, and this is an exact quote, it is a close call. This is unheard of legislation, untried legislation, and it was fast-tracked for an appeal immediately that will be heard this summer. The court also noted that, and I'm going to quote, compliance with the law will be costly with potentially business-ending consequences for some members of the market. That is the Illinois court speaking in the decision we've heard about today. If you're relying on the Illinois decision, you're basically in a four-quarter game saying how it's going to come out when you're barely into the first quarter. It is severely uncharted waters. and I personally, having read all this, believe that the bill violates the Supremacy Clause of the United States Constitution and the Commerce Clause and will be litigated here and it will not survive a challenge in the Federal Court of the Tenth Circuit here.
Thank you. Thank you.
Madam Chair and members of the committee thank you for the opportunity to testify today My name is Chris Hill CFO at Bankers Bank of the West a Colorado payment processor and correspondent bank that has supported community banks and the small businesses they serve for more than 45 years. We understand the concern the bill is trying to address. Merchants understandably question why interchange is assessed on the tax portion of a transaction, and helping small businesses manage payment costs is a very important goal. Our concern is the practicality of implementing this policy within the payment system. From a processor's perspective, a typical card transaction passes through multiple systems. The merchant's point of sale software, a payment gateway, a processor, an acquiring bank, the card network, and finally the issuing bank. Many small businesses use third-party platforms, and those systems do not always transmit tax and tip information in standardized data fields that the networks can separate for pricing purposes. In many online or click-to-pay transactions, the authorization is sent through the network as a single aggregate amount. This challenge is especially relevant in industries like restaurants and hospitality, where final charges may differ from the original authorization. That means the final transaction amount may change between the authorization and settlement, which makes separating those components within network pricing much more complicated. Payment networks also operate as a national infrastructure. When a single state introduces unique rules, those systems must create state-specific processing logic across millions of transactions. That complexity increases development, operational, and compliance costs across the ecosystem, that require time to align and implement. Large retailers may have some of the systems to adapt quickly, but most small business retail transactions operate at the basic data level, relying on third-party payment platforms that they do not control. Changes like this could require costly software or hardware upgrades because the detailed fields needed to separate tax amounts are not consistently available across the system today. We support the efforts to reduce payment costs for merchants, But any policy in this area must account for the technical realities of how transactions move through the payment system so that Colorado's small businesses see real benefits rather than increase complexity. Thank you for your time and consideration.
Thank you.
Madam Chair and members of the committee, Katie March with Colorado's credit unions. Credit unions have engaged and appreciate our many conversations with Senator Lindstedt on this bill. We've worked in good faith to highlight our concerns with the underlying policy and the significant impacts that we see to credit unions. Ultimately, we have informed Senator Winstead that while we deeply appreciate his attempts to exempt small financial institutions, our view is that this will not work and will create unintended consequences. Therefore, we remain in opposition because of the direct harm and potential future risks for small financial institutions. I've been asked frequently why the exemption language does not work, and the answer to that is very complicated. The question is about implementation. The payment ecosystem is not built to separate certain type taxes and related layers of data from the transaction and authorization and settlement messages. Creating a carve-out would require coordinated costly changes across point-of-sale systems, payment gateways and processors, and issuer platforms, and would likely drive networks towards uniform laws and rules that effectively pass along costs and solutions to all issuers, regardless of their size and statutory exemption. We hoped that payment experts could be consulted to design something from the ground up, but instead the language simply demands an unworkable and untested fix. Because networks favor consistent rules and must manage compliance risk, our experts all agree that the practical response is likely a lowest common denominator approach that applies no fee on tax logic broadly, sweeping supposedly exempt small issuers into direct impacts one way or another. Small issuers could also be hit through network repricing and fee shifts merchants steering towards lower cards and new compliance and technology burdens imposed by system vendors As a reminder local credit unions make up a small but important portion of overall payment systems and as a result are reliant on others and broader policies to offer that critically important service to our members. No other state has implemented this type of legislation, and an asset cap exemption has never worked to actually hold small institutions harmless. I urge a no vote. Thank you.
Could you all hear Ms. March's last part of her comments? Because you can say them again.
The one drawback of having the air is, you know, 14,000.
I was talking real fast. You all heard. Okay. Thank you. Thank you so much. Senator Liston. Thank you.
Thank you, Madam Chair. Mr. Metzger, you represent the Canvas Credit Union, I believe you said. So, and to Ms. March's point, I think that there is, in the bill, there's the exemption that institutions under $60 billion in assets would not be affected at all. And I think Ms. March was testifying that that isn't necessarily the case. What's the size of Canvas? And if Canvas is under $60 billion, I don't know. I know you've got a good presence here in Colorado. Why, if you're supposedly not impacted, you're testifying, and I think Ms. March was saying the same thing, that you would be impacted. Could you elaborate? To Mr. Metzger or Ms. March? Both. Maybe Mr. Metzger first and then maybe let Ms. March. Mr. Metzger. Yes, Senator.
Thank you for the question. You're right. We are well under that threshold. We are $5 billion in assets, so well under the $60 billion asset threshold set in this proposed bill. The answer to your question, though, is that it's not the exemption language that we're concerned about. It's the practical reality of implementing a threshold. The reality is that market forces will inevitably cause the revenue to come down on those interchange transactions for small issuers like Canvas, like other credit unions and community bankers like my friend over here. So even if we are, in theory, protected by the $60 billion asset threshold in this bill, there are forces in the market that, because of routing rules and the payment networks, that will cause the price received on each of those transactions to come down. We saw that at the federal level under the Durbin Amendment in 2010-2011, there's a $10 billion threshold for small issuers at the federal level. The thinking was, okay, we'll protect the small community banks on debit card interchange. That has proven not to be effective. In fact, our interchange revenue fell dramatically after the implementation of that Durbin Amendment due to market forces. So the statutory language proved not to be enough to withstand the market forces. At the federal level, we don't think that the statutory language here in Colorado would be enough to withstand the national global market forces that we see.
Ms. March?
I'm happy to add to that. I think my friend Ben did a really good job. Basically, we've seen this story before. We know and have talked to many experts who have told us that while the intention is very, it's very well intended, to be able to protect and hold harmless our small financial institutions, we just don't believe it's going to work. And I've been using the analogy some, that this bill is kind of like if you're going to try to come and flip over a table and say we're going to redo the whole system and figure out how this is going to work, but the exemption is basically saying that this one teacup gets to stay on the table after you flipped it over. And that's just not how the market is going to work and going to adjust to that, according to all of our experts.
Senator Linstead. Thank you, Madam Chair, and thank you, Ms. March, for being here. I have so appreciated our conversations over the last several months. Colorado's credit unions and small institutions did help on a lot of the language in this bill, and we included many, many of your suggestions. You know, I have a blank check on this legislation to you all to make this exclusion work. I would ask if there's anything you think that could be added to the bill to strengthen the protections for small institutions. The other option that many members of the Senate have brought to me to help small institutions and make this maybe an easier bill to comply with would just be a flat cap on interchange fees. I guess I'd love your feedback on either of those. Ms. March?
I can't say that I've ever negotiated amendment language while sitting up here at this desk before, but I'm teasing. That's a new one that I am hearing about and have heard other folks say. I would have to bring back to my folks. I think the challenge that I am seeing with this is that we have spent a lot of time, as you know, going about trying to figure out a way to make this language work. When you approached us with the idea of putting this exemption into the bill, we worked in good faith to try to see if we could make it work. The problem is that credit unions, again, we are a small player in this system. We don't get to set the rates. The payment card networks do. And while there is some enforcement mechanism on there, there isn't something that says that they are required to keep things the way that they are because the state can't do that. It's a private contract, right? And I think that the same is true. Part of the reason this bill has been written the way that it is is because it would open us up to even more litigation for a flat cap rate, which we already know there will be some. So happy as always. Credit unions care very much about coming to the table and having a conversation. But, yeah, I'd have to see the proposals specifically.
I think there's more questions, but in keeping with our play by the rules, we'll thank you for your time, panel. And again, there's just of opponents, there's three more panels. So I'm really grateful for your time today. Thank you. Thank you.
Okay. Okay. The next panel will be Chrissy Stromat, Massaro Torito, Brenda Lucio, Darren Overstreet. Those may all be virtual. One of them? Okay. Perhaps the handwritten Greer Bailey is filling in for one of them Okay There's no one on this panel. We'll go to the next list. Oh, I'm so sorry, folks. Sorry. My apologies, team. It's hard to manage the many lists of folks who have signed up in which order and on what position. My apologies. I didn't mean to go back to the proponents. We're going to the panel two of the opponents, so I'm sorry about that. That would be John Saltzman, Leslie Oliver, Chris Romer, and Daniel Daugherty. Opponents. Yes, sorry. After I said what we were going to do, I got the wrong list in my hand. Pardon me? Yes. Okay. Well, welcome. We'll start with our in-person witnesses. Who would like to begin? I can go.
Good officially afternoon now. My name is Leslie Oliver. I'm the Vice President of External Affairs for the Denver Metro Chamber of Commerce, and thank you for the opportunity to testify today. At its core, this bill raises a fundamental philosophical concern for the business community. It interferes with the right to contract. Senate Bill 134 would dictate the terms and conditions of private agreements between payment card networks and retailers by regulating how interchange fees are structured. Colorado's economy relies on the ability of private parties to negotiate contracts and develop market-based solutions. When government inserts itself directly into those arguments, it creates uncertainty and undermines the predictability businesses depend on to operate and invest. When the state dictates pricing formulas and private contracts, the costs do not disappear. They simply reappear elsewhere, often in ways that disproportionately harm small businesses. Small businesses particularly need stability and security in their payment systems, and limiting contractual flexibility threatens those essentials. For these reasons, the Denver Metro Chamber respectfully urges a no vote on Senate Bill 26-134. Thank you.
Thank you so much. Thank you, Madam Chair.
My name is Daniel Doherty, and I own Jordan L.A. Sports Bar and Restaurant for over 26 years. I am not here representing a trade association or a lobbying group. I'm here as someone who opens the doors every morning, pays the bills, and tries to keep good people employed. the sponsors of this bill talk about helping small restaurants but a restaurant paying 167 000 a year in processing fees is doing over 10 million in card sales that's not a small restaurant the biggest beneficiaries of this bill are multi-billion dollar corporations like yum mcdonald's walmart they're the ones who push for it and they're the ones who will pocket the savings meanwhile i get stuck with the headaches and the fallout if this bill passes i could be forced to negotiate new interchange rates with hundreds of different banks and credit card companies I already work 60 plus hours a week I dealing with food costs labor shortages insurance and rent Now you want me to become an expert in the global payment system That not realistic The big chains have terms of people for this I have a small staff trying to serve great food. Also, in addition to SB 26-134, I ask Senator Joda and Linstead, creators of this bill, to not stop here. As a small business owner, I recently, in order to survive, have asked my customers to help pay crazy interchange rates. My customers were asked to pay credit cards. They also pay with me an additional 3% whose intent is to help me. Not only do credit card companies collect interchange fees on this 3%, but they also increased my interchange fees based on the fact that I was collecting 3% for my customers. On the other end, my customers were paying more at my restaurant and also more on their credit card interest rates. We're all losing, and myself and my customers are not protected. This is obviously price gouging and price fixing in its largest scale. i'm asking the committee to vote no on this bill and i'm asking you to think about what it actually looks like from behind the counter of a small restaurant we need policies that level the playing field between small independence and national chains the builders does the opposite it hands our biggest competitors another advantage and asks us to pay the price thank you thank you
mr doherty and i let him go a little over because she went a little under um let's go to our online
witnesses. Mr. Saltzman. Thank you, Madam Chair and members of the committee for inviting me to testify. My name is Josh Saltzman, and I'm the Senior Vice President for Government Affairs at Airlines for America, which advocates on behalf of our members and customers to shape policies that promote safety, security, and a healthy U.S. airline industry. Airline loyalty programs are an integral part of our business because they are so popular with customers. In fact, approximately one out of every four American households has an airline credit card. Consumers in Colorado rely on the points they earn from everyday purchases to later redeem them for flights. And for less frequent and leisure travelers, these programs can make all the difference in affording an unexpected trip, like to see a sick relative, or one that absolutely that they must make, like for a sibling's wedding. These programs are a win-win for consumers, airlines, and the economy. They're also a huge win for your state. AFRAE's latest data shows that tens of thousands of airline and airport employees live and work in Colorado. One AFRAE member has over 300,000 cardholders and almost 3 million rewards program members in your state. Another has over 400,000 cardholders and over 1 million rewards program members. Nearly three-quarters of a million people visited Colorado using airline credit card points in 2024, with an economic impact of $1.2 billion. And nearly 10,000 Colorado jobs are supported by travelers using their credit cards to visit your state. This proposed interchange legislation would undermine these programs, harming the Coloradans who use them to reduce their overall living expenses, as well as the visitors who support your travel economy. On behalf of the U.S. airlines who proudly support over 100 transport, over 100,000 people in and out of Colorado every day, we ask that you vote no on Senate Bill 134. Thank you, and I'm happy to take any questions.
Thank you. Mr. Romer?
Madam Chair and members of the committee thank you for the opportunity to testify today My name is Chris Romer CEO of Vail Valley Partnership We are the Regional Chamber of Commerce and Economic Development Organization, serving Eagle County and Colorado's Central Mountain communities. I'm also here as a member of the Denver Metro Chamber of Commerce and Colorado Competitive Council. My membership consists of hundreds of businesses that make up the backbone of Colorado's tourism economy, including lodging operators, restaurants, outdoor recreation companies, retailers, and the small businesses that serve millions of both locals and visitors every single year. We appreciate the intent behind Senate Bill 26-134, reducing costs for businesses as a goal that we share. However, we respectfully oppose this bill because of the impacts it will have on both the tourism industry, as outlined by Mr. Saltsman and the banking institutions as outlined by the earlier panel. For tourism dependent communities such as ours, electronic payments are not optional. They are essential. Visitors overwhelmingly pay for hotels, lift tickets, dining, retail, recreation, using credit cards. That means the payment systems must be fast, secure, and universally compatible, especially for our international visitors. For the small business hospitality businesses that dominate our mountain economies, this legislation will need new costs, new compliance burdens, and operational disruption during our peak visitor seasons. Our community banks are also in an outsized role in our rural and resort communities. They finance our businesses. They finance hotels, restaurants, workforce, housing projects, and small business expansion. They provide the credit card programs, fraud protection programs, and transaction infrastructure to make this all possible, to make this work. This legislation will disrupt our business ecosystem and will result in new regulations that make business difficult. I urge you to vote no on 134. Thank you for your time and consideration.
Thank you all for your time. Are there questions from the committee for this panel?
Senator Liston. Thank you, Madam Chair. Yes, I do have a question to Mr. Saltzman with the airline industry. Sir, thanks for being here. Can you give us some idea? You alluded to the fact that the various rewards programs and that people who use airline credit cards and rewards and so forth, If this legislation were to pass, would that have a positive impact or a negative impact on the rewards? Would some airlines be forced to either reduce or eliminate their rewards programs? Mr. Saltzman.
Oh, I'm sorry. Thank you. Yes, Senator, I think it's without question that this legislation would degrade loyalty programs, which would have a direct impact on consumers. The exact consumers that go, all those cardholders in the state who appreciate these programs and rely on them to support their travel budgets. And, you know, I think that's without question.
Very good. Thank you.
Thank you all for being here today. Thank you. Okay back to the correct list provided by the opponents for the measure panel number three Andy Montgomery Nicole Willusis Megan Harmon John Steltz raid and again if I mispronounce your name my apologies and just please correct me Okay. Who would like to begin today?
Madam Chair and members of the committee, thank you for the opportunity to speak today. In opposition of Senate Bill 134, my name is Nicole Wolucius and I serve as the commercial market president for First Interstate Bank in Northern Colorado. I work with clients across our region and support teams that operate across multiple states. I do want to first state, based on a prior comment, that a rate cap on interchange would violate interstate commerce laws and would result in litigation. While the bill appears to simply remove interchange from the tax portion of card transactions, the practical impact is much broader. The payment system is not designed to split out taxes at the point of sale, and forcing that separation would disrupt everyday transactions Coloradoans rely on. Financial institutions take on fraud and credit risk for the full amount of a purchase, including taxes. Interchange helps cover that risk. Removing it only on the tax portion introduces inconsistencies that could cause transactions to fail, leading merchants and consumers to handle the tax piece separately using cash or check just to complete a sale. The bill places a significant operational burden on merchants. They would have no practical way to identify which cards qualify, which issuers fall under the $60 billion threshold, or how to carve out the tax portion in real time. This creates confusion at checkout and increases compliance risk for businesses of all sizes. The proposal does not align with how national payment networks function. The system's run on consistent, uniform rules. A Colorado-only requirement would require major system changes, substantial costs, and would introduce new points of failure. Finally, and most concerning from my perspective, is the disruption this would cause for the communities I serve. Working for a community bank with locations across several states, I see how important consistency is. In summary, Senate Bill 134 creates operational confusion, legal risk, and real-world disruption, and I respectfully urge a no vote. Thank you.
Thank you. Good afternoon. I want to thank the chair and members of the committee for allowing me to speak in opposition of Senate Bill 134.
My name is Andy Montgomery. I'm the president and CEO of FMS Bank, which is under $60 billion. In fact, it's under $1 billion. We are a true community bank that's been around since 1982 that serves northern and eastern Colorado. Most of our customers are small businesses. So while it would seem that this bill, we would be exempt from this bill, that is not, it's not that simple because we, a bank our size, is forced to use outside service providers in order to provide credit card transactions. And if the law gets too complex, those providers may just withdraw those services from a bank like ours. how and I've talked to multiple merchants of our customers about this how this bill gets put into effect who decides who's exempt and not exempt how that process works is baffling to me I don't know really how the merchant goes through that if it's on the processor that means wholesale change it would seem in equipment and software and that is not easy to implement In fact you know I in my past have had working relationships with some of the big payment rails which do business globally around the world And to make this a prime mover for them for the size of the state of Colorado seems a bit naive. They're going to fight this. They're not going to want to change their equipment, their software to be able to provide it. And for the consumer, the merchant, it provides a lot of confusion. Do they go have two transactions? Do they go back inside and pay the tax portion as they go inside? I think this bill is going to create a lot of confusion, a lot of chaos with merchants. I'm really sympathetic to our small businesses and what the struggles that they go through. There's a lot of cost contributors, frankly, a lot of laws and things that go into their struggles. So I urge you for no vote on this.
Thank you.
Thank you, Madam Chair, members of the committee. I'm Megan Harmon. I'm the Chief Operations Officer of the Eastern Colorado Bank in Colorado Springs. I'm a third-generation banker working in my family business for the last 25 years. First, I want to state that I appreciate and understand the desire to reduce costs for our small businesses that accept credit cards. As many of my colleagues have said, those are our customers. We'd be forced in the processors to add three areas to their processing, separating the tax, separating the transactions by state, and sponsoring bank-size assets, asset size. These three things cannot be done without additional programming. The data might be there, but it might require updated software and possibly hardware for our merchants. The processor will not absorb these fees, and when it is passed down, it will not be something obvious like a Colorado compliance fee. It would be hard for us to argue on his face and what it is at all. Often when it's passed on to the merchants, they'll see things like 1.4%, 2%, 2.2. There's no explanation as to what these fees are derived from. At the very beginning, when Senator Linsdip was thoughtful enough to include me in a conversation about prohibiting such fees, I said, I'm just not sure how it can be done. After conversation and research on similar legislation in other states, I reached a conclusion it cannot be done without consequences that far outweigh the spirit of the bill to reduce merchant fees. I just renegotiated our complex contract with our processor. I've been in this business for 25 years, and I had to hire an expert to help negotiate it. It's that complex. If I try to go through this the next time with a new state law that complicates this negotiation, I can't imagine how that will go. Therefore, I urge a no vote for this bill, regardless of the fact that I do agree that we should give our merchants some relief. Thank you.
Thank you. now to our online witness please introduce yourself and remind the committee who you
represent today and proceed with your two minutes thank you madam chair and members of the senate business labor and technology committee my name is john stelsreed i'm the market president for alpine banks colorado river region in western colorado i oversee the retail market that spans from glumont springs to battement mesa in western garfield county i'm speaking today in opposition of the proposed Senate Bill 134. I would like to start off by saying that the success of small businesses, including restaurants in Colorado, is of paramount importance for community banks. Our interests are aligned in many ways. We are only as successful as our business community in which we serve. I have a lot of questions about how this bill will end up working as proposed. The model is not in practice anywhere in the country at this point. We don't know how the processors will answer to the requirements. My biggest concern is that this legislation will create confusion within the credit card payment systems and ultimately the business community My community bank has a number of locations and resort markets that depend on out tourists looking to spend money Will this bill make it easier or harder for these folks to spend their money I don know that anyone knows what this will look like yet. The other unknown at this point will be the costs associated with implementing this change for the small business. What are the additional administrative burdens to track separate cash transactions for those patrons wanting to pay sales tax and cash or check? How will the credit card companies pass on additional costs of implementation and administration of this legislation? There are a lot of unknowns regarding where this could go. I'm not sure that Colorado blazing the trail makes the most sense right now in the current environment. I respectfully encourage you to see how this plays out in the other states first. Let's have the other states pave their way on their dime. Thank you.
Thank you, Mr. Stelzreed. Are there questions for this panel? Senator Liston.
Thank you, Madam Chair. Mr. Stelzreed. Stelzreed, yes, I'm sorry. I'm familiar with your bank. You have branches all over the state. And you made a reference that people from out of state come in the tourism dollars. would it have an impact if I was from New York or California, for example, and I came to Colorado and I wanted to use my credit card that was issued in one of those states, would that, because of all the rules and regulations on how this would work, would that impact my ability to use my credit card from an out-of-state bank here in Colorado? Mr. Stelz-Reed.
Thank you, Madam Chair. Great question, Senator. The short answer is we just don't know. We don't know what that looks like, and that's my concern. Senator Lindstedt.
Thank you, Madam Chair, and thank you, Ms. Harmon, for being here. It's always good to see you. I appreciated our conversations as this bill was brought to be introduced. I was talking offline with a large payment processor. processor, that payment processor told me that they would be much more comfortable if the small bank exemption was eliminated. I guess my request to you would be what do you think of that and is there anything that I can do, I have that same blank check offered to the community banks to further protect your business from unintended consequences in this bill.
Ms. Harmon. Thank you. of the exemption obviously doesn't ring super exciting for us just because we have some ability to say that isn't allowed if we can point to anything. And I think what they're trying to say is that make it simple for us, make it easy for us. And so why else would they be saying that other than the fact that it is complex? Could it be greed? Sure. I think more than that, it is complexity. It's those three things we were talking about, separating those out. I think they're trying to figure out probably with the recent case that passed, how do we do this? And how do we make it to where we don't muddy the waters on that since especially in this bill there is an ability to have a rebate or things like that. They need to know what that number is. So I think that if they are saying they need you to make this as simple as possible, I think that's probably a sign more to the fact that they are trying to figure out how they would do that, which is our same concern we would have Would we ever want to be non I would say no even though I not sure that it would work At least it something for us to stand on but I think their response about the complexity is probably the best thing to focus on
Senator Liston. Thank you, Madam Chair. Mr. Montgomery, you were alluding some of the same things that Ms. Harmon was saying, how it would impact your bank. How would it also impact some of these small businesses? Because what I'm hearing from a lot of, from everybody, it's, if this bill were to go through, it wouldn't just impact the restaurant industry, it would impact all businesses. Could you elaborate a little bit on that?
Yes, thank you, Senator. And, you know, we as a bank don't actually make a lot of money off of interchange fees. So if we're exempt or not exempt, that is not an issue for us here. It's the complexity of the bill and the complexity for our merchants to be able to comply to it and what the law of unintended consequences in doing that. Is it new equipment? Is it new software? Are there fees? What's the transition look like? Are there exclusions? Do people just bypass the state of Colorado or certain industries because it's too hard to comply? There are a lot of unanswered questions here that I think really could be impactful to small businesses. Thank you, Mr. Montgomery. One last question, just for
clarification. What was the name of your bank, sir? FMS Bank.
F-M-S Bank.
Thank you all so much for your time today.
Okay. If we could please welcome Scott Sager, Sarah Rule, Shelley Ormsby, Michael Kerr, and Robin John Russenfeld is the last person who wasn't included in the list who's signed up to testify in opposition to the measure. Okay, we'll go ahead and get started. Who would like to begin?
Good morning, Madam Chair and members of the committee. My name is Scott Sager. I'm the Chief Financial Officer at Colorado Credit Union. We've been around for more than 50 years and the trusted financial partner for more than 27,000 members and 78 employees that serve our three branch locations. Our members expect us to protect their financial resources and we take that role seriously. This includes offering safe and secure credit and debit card programs, stopping to prevent fraud, and we pull out all the stops to protect our members, especially when there's a retail breach. When we learn a potential fraud, we're all hands on deck, we immediately stop it in its tracks, we have to close some counts, we issue new cards, and we absorb the cost so our members don't have to. These attacks require an audit of every one of our 13,000 cards that we have on issue at the credit union. Attacks at retailers happen both large and small, they occur constantly, and some are public, but a lot are not. It is a complex multi-process, and we get no corners when it comes to protecting Coloradans. The fraud protection comes with a significant cost and why retailers pay interchange fees. It also helps retailers avoid costs associated with checks bouncing, cash management and theft, provides guaranteed immediate funds at the time of the transaction, and increases sales.
Regulators require credit unions and other financial institutions to follow higher data security standards than retailers do. This is why we so frequently see data breaches at other locations across the country. Senate Bill 134 includes an asset threshold exemption that introduces more complexity while disproportionately local financial institutions like Colorado Credit Union. The networks run on an international system, and promoting an exemption like this does require system upgrades, and even small changes require major investments and additional costs to small credit unions like ours. Different rules for different issuers can unintentionally distort the payment market and create confusion for merchants and consumers. Payments work best when they operate consistently, and state-specific rules create a myriad of operational challenges that will raise costs for everyone. I ask for your no vote. Thank you. Madam Chair and members of the committee, thank you for the opportunity to testify. My name is Shelley Ormsby. I'm an Associate General Counsel and Compliance Officer with Elevation's Credit Union. We are a not-for-profit financial cooperative serving members of local communities, and we would respectfully oppose Senate Bill 134. While this bill may appear to make a narrow change in our payment system, it creates significant operational, legal, and consumer protection concerns, as you've heard here today. The card payment system is highly integrated nationally, globally. It's built on standardized processes. Our single-state mandate that alters how interchange is handled is not only untested, it's extremely complex and likely to result in significant cost in years of litigation for the state. The bill would require near-instant identification and validation of a tax portion of every transaction in order to remove interchange. That would require substantial redesign of payment systems across merchants, processors, and card networks. These costs would ultimately be borne by our members and consumers. For small businesses, that would be paid by their owners. Even then, systems would need to account for the many layers of local tax rates, mixed transactions where some transactions are taxed and others are not, ensuring that the tax amount is accurately separated, transmitted, and reconciled across millions of transactions each day introduces a high risk of errors, disputes, and compliance challenges. The bill also attempts to exempt smaller institutions, which is appreciated, but credit unions rely on shared vendors and payment networks. If those systems change, credit unions are affected, regardless of a statutory exemption. Ultimately, the bill requires credit unions to remain responsible and liable for the entire transaction, including the remittance of tax, but denying compensation for part of that. That imbalance creates operational risk and uncertainty in the payment system. For these reasons, we would respectfully ask that you oppose Senate Bill 134. Thank you for your time. Thank you. Madam Chair and members of the committee, my name is Sarah Rule, and I'm the Vice President of Fraud and Compliance at MinnaQua Works Credit Union in Pueblo. It's an honor to be here today to share how this bill would affect your constituents and the financial institutions that serve them. Credit unions help Coloradans navigate their financial lives and support the payment systems we all rely on. This legislation will not help Coloradans, it will not strengthen our ability to protect them from fraud, and it will not support the small businesses in our communities. Miniqua Works is a small but mighty not-for-profit cooperative credit union with just over 12,000 members in Pueblo. We are forged in steel and driven by purpose. We were founded in 1937 to serve steel mill workers, and today our doors are open to many hard-working Southern Coloradans. Our members expect the same things they would receive from a large financial institution, including the ability to swipe or tap their card and have funds reliably go through. Every single member deserves and gets the highest possible level of service. That includes protection against fraud. Fraud today is truly out of control. Seeing the effect it has on our members is sad. It's frustrating. And after working in fraud for more than 15 years I can tell you that every person is susceptible and no one is immune We know that we can stop all fraud What we can do is step in to help make our members whole when it happens Like other financial institutions serving Colorado, MinnaQual Works uses the interchange revenue to offset the high and growing costs of protecting our members against fraud. We cover the cost of fraud against their accounts. The retailers do not. These are important services that ensure the financial health of our people. Fraud is not a small problem. The Federal Trade Commission reported that Coloradans lost $217 million to fraud in 2024. Without a way to manage risk on that scale, the people who ultimately suffer are consumers and local businesses. I spend my day assessing risk, supporting members through managing fraud attempts and fraud losses, and building ways to prevent fraud. This is a critical way we protect Coloradans and businesses. While this bill may benefit some of the largest retailers in the country here on Main Street and Pueblo, it creates real challenges. This is not a locally requested or developed bill. It is a retail industry copycat of bad legislation in Illinois that mega retailers have run and failed to pass in at least 25 states. For those reasons, I strongly encourage you to vote no. Thank you. Thanks for coming in from Pueblo. Thank you. Are there questions for this panel? Senator Lindstedt. instead. Oh, I forgot our fourth panelist. I'm really sorry, sir. Please proceed. Not a problem at all. Madam Chair and members of the committee, my name is Michael Kern. I'm the president and CEO of Denver Fire Department Federal Credit Union. Our main location is in Senator Danielson's district and our membership is made up of 6,200 firefighters and their immediate family members here in the state of Colorado. Our firefighters are your constituents and they've dedicated their lives to serving Colorado and protecting our communities. I do understand this amendment attempts to exempt smaller institutions like mine, and we do appreciate that. But at our size, we rely on shared vendors, and we rely on shared payment networks. Changes to either will negatively affect our credit union. Senate Bill 134 would inevitably cut funding to our overall credit cards program, which will hurt my ability to serve our members. Today I'd like to share with you how cutting funding to our overall credit card program hurts my ability to give back to our firefighter community. As a not-for-profit financial institution, we have a mission to give back profit to our membership. Cutting any funding to our small institution encumbers my ability to realize profit and thus give money back to our community. We give back a portion of our credit card income to the Colorado Professional Firefighters Foundation. This foundation ensures 100% of its funding supports firefighters and their families across Colorado when tragedy strikes. Our credit union has funded over $600,000 to the foundation during the last 19 years. This funding comes directly from credit card usage income. and its income we realize because interchange income covers a significant portion of our fraud and system expenses. I can't stand here before you today and tell you how much profit corporate retailers give back to their firefighter communities, but I can't tell you exactly how much we give back and how it affects our community. I know this bill isn't friendly to my credit union and to the firefighters we serve, so I respectfully urge you to oppose this legislation. Okay, Senator Linstead. Thank you, Madam Chair. And actually sir thank you so much for being here and for everything you do for communities across our state I just wanted to clarify you not here today representing the Colorado professional firefighters That correct I'm here representing Denver Firefighter Credit Union, which solely serves firefighters throughout the state of Colorado. Yeah. One more. Senator Linstead. Thank you very much, Madam Chair. And thank you so much for driving up from Pueblo. It's really great to have you here. I had a question. Do you know how much of the interchange fee actually goes to fraud prevention? I've asked so many folks, and I don't seem to get a clear answer. I don't have an exact number, but I'm happy to look into it for my credit union specifically and get back to you. I will also say that we do make it a priority to serve our members, and a huge chunk of our interchange revenue does go back to paying them back on fraud losses. Thank you, Ms. Rule. Senator Liston. Thank you, Madam Chair. Sir, do you have a further question? Do you have an explanation that you wanted to? No. For our particular institution, I can answer that question, Senator, the one you had about what percentage of interchange income covers fraud and system expenses, but I can only answer that for my institution. But if you'd like, I can tell you. I would like it. You'd like it? Okay. For our particular institution, our interchange income covers 85% of our direct fraud and system expenses. 85%? Correct. It does not cover all of it. Very good. Senator Liston. Thank you. And to Ms. Ormsby, you might know this. So if these interchange fees go down to the credit unions and so forth, would that have an impact, as I understand it, that if there's credit card fraud or whatnot, would that possibly go away? Would that impact some of the credit unions or banks, for that matter? They'd say, look, we might not cover this anymore. Is that a possibility or not? Ms. Ormsby. Thank you. Thank you for the question, Senator Liston. I think there is a possibility of this misunderstanding how the interchange income flows to the financial institutions and ultimately to fraud protections. But the biggest piece here is that these networks are, you know, guaranteed payment and guaranteed payment acceptance for our small businesses and large businesses, frankly, the retailers. But they provide some of that guaranteed payment protection because of the interchange income they receive, which then flows down to some of our smaller institutions to do things like refund money when there is a charge that someone says, I didn't make that charge. The merchant gets to automatically accept that payment without question. If it does end up being fraud later, we end up refunding that. So, yes, ultimately any decrease in that flow of funds that would go to our financial institutions to help us deter fraud. I mean, we have full-time, we have just our small credit union, we have eight full-time fraud individuals salaried. We have to use fraud software to stop some of the fraud in the networks that are paid by our members. So, yes, any of that change in income would ultimately impact our ability to honor the fraud claims and refund our members. Senator Liston. Thank you. So the law of unintended consequences would be that if these interchange fees were to go down go away that that could come back to bite the consumers That if somebody made a charge on their card for or they go that not my charge That service that you all provide could conceivably go away. Ms. Ormsby? Sorry, thank you. Definitely unintended consequences. We do have federal regulations that we work with to protect our members on things like fraud charges, But I think that's ultimately the unknown of the unintended consequences. And I appreciate the way the bill was structured to try to help prevent a downstream penalty, if you will, from some of our payment processors. Unfortunately, like I think someone else testified to, we don't get to have insight into what they're passing through to us. And at a state level, that just sort of interrupts the framework, national and global payment systems, to be able to know what we're charged and then what we're going to have to pay more for as a financial institution in the state of Colorado because we've imposed some patchwork, if you will, on our payment systems. Thank you. Thank you all so much for being here today. Okay. I'm ready to move back to the proponents. All right, folks, we'll move back to the proponents of this bill. If we could please welcome. Okay, so the panel that I called before mistakenly, if we could please welcome Chrissy Stromat, Massaro Torito, Greer Bailey, and Darren Overstreet. Why don't you go ahead and begin since you're in the room. Welcome. Thank you, Madam Chair and members of the committee. My name is Gary Bailey. I'm the Executive Director of Colorado Wyoming Fuel Marketers. I just wanted to clarify a couple things. Yes, absolutely, the banks and credit unions, interchange companies, provide a service. I don't have the data about how much interchange every gas station pays in Colorado because the prices of fuel are volatile. I mean, you've seen it in your districts. Gasoline has gone up 40, 50, 60 cents over the last two weeks because of the conflict in the Middle East, and we're going to pay interchange on that 40, 50, 60 cents. So I wish that I could tell you that interchange wasn't a driving cost and a big cost to fuel marketers, but I can't. We don't really have any surety based on the volatility. What I will say is that we absolutely process transactions every single day, business-to-business, government fleet cards, nonprofit cards, that back out the tax. Traditionally, these are called Level 2 and Level 3 transactions. And it's part of the API system relative to the file build where you just add a flag. Add a flag similar to a card present transaction or a pin-based transaction or anything else that we do. Now, I agree that a lot of systems will potentially have to be revisited, similar to every time you guys remove a sales tax exemption, change of taxing definition, or another special district tax goes into effect, all of those point-of-sale systems have to be changed, and those flags have to be amended anyway. So I guess from the perspective of how much does this really cost on just the taxable portion of the sale versus the principle of a transaction. I don't know. I think it's interesting to say that fuel sales in Colorado are $6 billion a year, of which 60% to 70% are credit cards. So that's the principle of the transaction, right? So I guess, what are we really costing? What are we really doing? And if the point of this bill is to not accelerate the tax burden on Colorado citizens, and when we pay the interchange companies to collect the tax for the state, aren't we all really interested in just saving the taxpayers money? We'll need you to wrap it up. Please, sorry to interrupt. Thank you, Madam Chair. Okay. We'll go to our online witnesses now. Do we only have two on this panel? Okay. All right. Welcome. Masaru Torito. Hi, Madam Chairwoman and committee members. My name is Mas Torito. I apologize for the loud noise behind me, but I'm in D.C. actually at the Rayburn Congressional Building talking to our state legislators about some other issues. I own Copero Restaurant. I'm second generation. My family started it 40 years ago. And in 40 years, we've seen a lot of changes. One change has been that when we started, we were pretty much cash only. And over the years, every year, it seems like more and more people use credit cards. And now over 90% of our customers use credit cards for their transactions. And for me, I of course understand there's a convenience and the reason why credit cards are used and it's understandable to pay some fees, but it really is our third highest cost in our business next to food and labor. So it is not a small, inconvenient fee. And then we're faced with this, I think, a real conundrum about what does it mean to pay fees on taxes? I mean, the thought of that is just so crazy to me that we're paying roughly 8% taxes, and then we had to pay another 3% in fees on top of that. And that really adds up. We're talking here at the federal level that over 40% of restaurants last year were not profitable. And you all know that there's been a struggle, especially in Colorado and Denver, of restaurants closing down. So this fee on taxes really, really becomes a big issue. My calculation is, you know, we're saving at least $10,000 a year at each of our stores by removing this fee. And that right there is a part-time 20 to 30-hour employee that's going to have a chance to work in our restaurant or to put money in our pocket to be at least profitable. By no means are we trying to say that credit unions should be in the challenge of having to comply with this. But we need relief. We need your help. Thank you so much for your testimony. Thank you. Next, we'll go to Chrissy Stormat. Hi, can you hear me? Yes, go ahead. Okay, I'm sorry. My name is Chris Stormat and Chair Danielson and members of the Senate Business Committee. Thank you for the opportunity to testify. I am the general manager of the Blue Bonnet Restaurant on South Broadway in Denver. We opened in 1968. and we employ 47 hardworking Coloradans down from 98 just seven years ago It never been more challenging to run an independent restaurant like ours We struggle under skyrocketing labor costs Food prices are continuing to go up. Inflation remains persistent, and we can only raise our menu prices so high before customers drop off, and we are already at that level. On top of all of that. We're paying exorbitant non-negotiable fees every time a customer swipes a credit card at our restaurant. About 95% of our business is credit card business. Only 5% now is cash. We even pay swipe fees on the sales taxes that we collect and remit for the state and our local government. This is a service that we provide, and it's somewhat offensive that Visa and MasterCard earn billions in profit as a result. We paid over $62,000 last year in swipe fees that include swipes on taxes we cannot keep and on the tips that the servers and the bartenders take home. We need some of that back to be able to literally stay open and employ our 47 employees. Just getting back what is going towards sales tax would be around six to seven thousand dollars in annual savings that honestly we need desperately right now. The one thing that I would like to say after listening to some of the opponents is no one's talking about chargebacks. So all of the fraud that they are taking care of for their customers. We are getting charged backs on some of that, and we have no ability to fight any of that. Senate Bill 134 makes sense. It frees me from paying swipe fees on the sales tax dollars that I don't get to keep. I'm asking for some relief here, so we continue to do what we do best, which is serve burritos in Denver. Thank you for the opportunity to testify today. I really do appreciate it. Thank you so much. Is Mr. Oversight, is that Overstreet? I'm sorry. It's not Oversight. Yes. Let's be clear. Can you hear me? Yes, we can. Please go ahead. Your two minutes starts now. Thank you. So I'm Darren Overstreet. My wife and I own a print shop in Aurora. I am a proud Air Force veteran of 24 years, retired. and we've been strong in the community all along. My wife is currently on the board of the Salvation Army and throughout my career and on the volunteer side, I've been involved in community efforts and stuff as well. So really, it's very important to us that we get this taken care of and help our business community around here. I'd like to thank Senator Joda and Representative Jackson as my representatives, as well as all of the other dedicated public servants involved. I support this bill. I'd like to address some of the opposition I've heard. Really, the only opposition I've heard is that it would be hard. Well, Y2K was hard too, but all of these banks scrambled. They all spent money and they got it taken care of because it was necessary just as this is necessary. We shouldn't be paying for money that's not ours. And there's an easy way to handle this. You could simply say you can't charge for Colorado sales tax. That means they deduct the amount of the Colorado sales tax from every sale, which means they'd still be getting county and city taxes that they'd be charging for, which would help to cover for some of the wholesale, resale, and nonprofit transactions that take place. Because most of my customers just like most people in general pay with credit cards And so what this does is it makes it harder for us to pay our sales taxes It makes it harder for us. I mean, personally, I've been behind on our lease. I've been behind on sales taxes. And all this does is make it harder to keep up on that. Thank you. Yeah, plenty more to say. Thanks. Thank you so much for your testimony. Members, are there questions for this panel? Senator. Give me a second. Oh, yes. Okay. It's all right. Mr. Greer, good to see you here. Are your members, are your franchisees, are they required to use a specific payment card processor? are are they allowed to use uh they required is it visa or mastercard or can they use some of the others mr bailey correct yeah bailey but um so it depends um so if you were if you're an independent then yeah you can go to a pcs or world pay or you know first data contractor whatever and do that if you're a branded marketer generally speaking the oil companies might make that deal for you The important thing to note is that between 2015 and 2022, we got mandates from the interchange companies to do PCI and EMV transitions, which had to make us update all of our payment systems anyway. And again, mostly for security and fraud purposes. But that's what kind of my point is, is that, yes, will this require some updates for retailers? Sure. Is that anything new than we have to do every single day? No. And we already process transactions with all the fleet cards and for all the governments that already back out all the taxes anyway. It's just a different type of, and it's a higher standard, but it's a different type of build. It's not impossible. Thank you very much. Yes, sir. Any further questions for this panel? Okay, seeing none, thank you so much for your testimony. and we will move on to the next panel of support. I'm going to call up Katie Nicholson, Chris Donato, Teresa Connelly, and Lee Wood. Perfect. Who would like to go first? Wonderful. If you could please state your name, who you represent, and your two minutes begins now. Thank you. Thank you, Madam Chair. My name is Katie Nicholson, and I am the owner of Old 121 Brewhouse in Lakewood, Colorado. I'm testifying in support of Senate Bill 134 and why interchange fees on the sales tax portion of a transaction have direct impacts to small business owners as an unfair double tax on our operations. When a customer buys a pint of beer, I collect the required state and city sales tax. However, credit card processing, credit card processors charge me a percentage of a fee on the entire transaction total, including the tax. This means I am paying out of my own pocket to collect and process revenue that never belongs to me. For a business like mine, this results in thousands of dollars a year in redundant fees. Mine specifically is around While that may seem small to a large corporation for a neighborhood brewery it represents a significant portion of our tight margins If I were able to retain these swipe fees, currently lost in sales tax processing, those funds would be used to offset our other rising costs, like for ingredients. Malt, hops, and yeast have increased 7 to 10 percent in the last 24 months. We all know about the aluminum increases and insurance increases as well. This would also allow us to keep our pricing flat instead of passing along another fee to customers. I ask you to support legislation that prevents merchant processor from charging fees on sales tax portions of a sale. Small businesses should not be penalized for fulfilling their obligation as tax collectors for the state. I ask you to please vote yes on Senate Bill 134. Thank you. Thank you. If you could go ahead and your two minutes begins now. Thank you, Madam Chair, members of the committee. I appreciate the opportunity to testify today in support of SB 26134. My name is Chris Donato. I'm the owner of a pop-and-pop restaurant, Champagne Tiger, just a few blocks from here on East Colfax. We take incredible pride in serving and supporting our local community. We opened almost two years ago and employed 24 amazing Coloradans. Since being a teenager, I've worked in the hospitality business, but over the last two years of owning my own restaurant, I've learned a number of lessons, including that hard work and dedication isn't always enough to make it, especially in Denver. The margin of success is very thin for independent restaurants. I'm not complaining. I love this profession. But I am asking you to relieve some of the current pressure. I'm asking you to help foster an economic climate that allows for more Coloradans to be more successful. We're currently paying non-negotiable fees every time a guest swipes a credit card at our restaurant. We also pay swipe fees on sales tax that we collect and remit for the state and our local government. That's a service we are required to provide, and we get no assistance to cover the cost. Let's see. Yeah, large banks earn billions in profit as a result. Are we prioritizing the success of large international credit cards over stimulating success in our local economy? That is what it feels like to me. In 2025, my restaurant paid just over $8,000 in swipe fees on sales tax alone. 2025 was our first year of being open, and we didn't make a profit, which is not uncommon for new restaurants. but I can tell you that $8,000 or so would have made a far bigger impact for me and my business and my team than it did for the credit card companies that collected that money. Senate Bill 134 frees me from paying swipe fees on sales tax dollars that I don't keep and provides some relief for small businesses of my size. We're asking for relief so we can continue to do what we do for our communities create jobs and define and build communities around Denver. Thank you. I urge you to support SB 134. Thank you. Ms. Connolly? Connolly, yeah? Connolly, yes. Perfect. If you could begin who you represent and your two minutes begins now.
Thank you, Madam Chair and members of the committee. My name is Teresa Connolly and I'm a regional business partner for Murdoch's Ranch and Home, residing in Fort Morgan, Colorado. We're in partnership with other similar privately held companies such as Big R Stores with a total of 50 store locations across Colorado serving land, animal, farm, and outdoor sporting interests. We provide stable jobs for approximately 2,000 of our neighbors in both rural and urban communities. I'm here on behalf of our entire membership to testify in strong support of Senate Bill 134. In the world of farm and ranch retail, we operate under ever-increasing pressures in a low-margin environment. Every dollar matters. To give you a sense of our scale, after labor and cost of goods, swipe fees are one of our most expensive line items. These fees, which can average 2% or more per transaction, have become a permanent and growing tax on our ability to do business. The current system is fundamentally unfair. We are effectively being charged a fee for the privilege of collecting and remitting Colorado's revenue. Yet the big banks and payment networks force us to pay them a percentage fee on that very tax money. Senate Bill 134 provides a common sense solution. By providing interchange fees on the tax portion of a transaction, this bill offers direct, meaningful relief. Furthermore, Senate Bill 134 provides five distinct paths for compliance, including a 180-day window for merchants to submit documentation for a rebate, ensuring this works for retailers of all sizes. Our companies are constantly making future infrastructure and expansion reinvestment plans. Every dollar we save from these swipe fees on taxes is a dollar we will reinvest directly back into our Colorado operations, whether it's opening new locations or upgrading our supply chain to better serve our rural sportsmen's and agricultural community. I urge you to support Colorado's retailers and our agricultural backbone by voting yes on Senate Bill 134. Thank you for your time. Thank you. And I believe I see
Lee Wood online. If you're able to turn on your camera, your two minutes.
All right. I should be there now. Your two minutes can start now. Thank you. Okay. Thank you, Madam Chair, members of the committee, for the opportunity to address this hearing. My name is Lee Wood, and I represent the Colorado Distillers Guild, and I'm also co-owner of Woods High Mountain Distillery in Salida. And I'm here to voice support for SB 134 as an important measure to ease the additional expense that we as small businesses pay to process sales tax payments made by credit card. So much like others in the hearing today, we have 95% of our transactions are paid by credit card. And that includes, of course, covering tips and sales tax, both of which are passed through expenses that we have. Credit card swipe fees are roughly, for us, about 3% on every transaction. And so, as you know, sales taxes are collected by businesses on behalf of the consumer. However, of course, we're responsible for paying the additional transaction fee. That transaction fee translates into thousands of dollars a year, even for a very small business like ours. And it's money that could go into hiring staff, buying Colorado agricultural products, which we use as inputs for all of our distilled spirits, and other standard business expenses. This bill offers a much-needed financial relief and a measure of fairness that will benefit every business in the state of Colorado that collects sales tax, in addition to my members as well as anybody else. So we urge the committee to vote yes on SB 134. So that's all I have. Thank you very much.
I'll give you back 30 seconds. Thank you all for your time. Are there questions for this panel? Senator Lundstedt.
Thank you, Madam Chair. I was just going to ask the restaurateurs here. The larger banks handed out some fact sheets to legislators saying that this bill would only save small businesses under $100. How much in interchange fees have you guys been paying on the sales tax dollars to, I guess, anyone on the panel that would like to answer? Answer.
Last year, it would have been around $2,000 in unnecessary fees.
It was about $8,000 for us. Sorry. About for us at our tasting room We privately held so that would be proprietary but for larger members it would run into six figures.
She said six figures. You can repeat yourself if you will.
I apologize. We're privately held, so it would be proprietary, but for larger members it would run into six figures.
Six figures. Okay.
Thank you all for being here today. On our last panel. If we could please welcome Daniel Swanson, Chris Caran, Chris Lanter, Lauren Roberts. Go ahead and begin when you're ready.
Thank you, Madam Chair, members of the committee, everybody in the room. My name is Lauren Roberts. I own and operate two restaurants in Denver, City of City, and Watercourse Foods, and a small tofu manufacturing plant in Trinidad, Colorado. I'm also on the board of directors for the Colorado Restaurant Association, and almost all of our members are small, independent restaurants like mine. And this bill would bring essential change and relief to a one-sided and harmful system, and it would help address the very real issues of the rising costs in shrinking economies that are decimating our cities across our state. Inflation has driven up costs of goods, services, a multitude of things. It's true. Over the last few years, work from home has emptied the downtown, and the high costs are preventing people from returning to our cities, visiting, living in our cities. And as a result, we have fewer customers, we have fewer jobs, and career advancement is frozen, which is a real issue if you care about the industry like I do. If the cost of living, working, and running a business does not change, we'll continue to see businesses like mine and we're right on the edge close jobs will be lost and people are not going to come back to our cities and it's bad for small business and it's bad for everybody else that's connected to us including our credit card processors as goes the small business so goes all of our swipe fees the reality is that we're not going to continue operating for long if things don't change and this would save us about 6k and swipe fees are a major expense for us. And so I urge you to please vote yes on this bill. Thank you for introducing this bill, and I'm happy to answer any questions.
This one.
Thank you, Madam Chair. My name is Dan Swanson. I'm an attorney based in D.C. I've worked on payments policy for about 20 years, most of those as a staffer in the U.S. Senate for Senator Dick Durbin, whose law regulating federal debit interchange has been mentioned here today. I was invited here by the Colorado Restaurant Association. A couple key points. The status quo with interchange fees is not sustainable. We've heard a lot of testimony today about how restaurants are on 1-2% profit margins. These fees are taking 3-4% out of every dollar paid by card to merchants. Something's got to change with this system. And I want to commend the sponsors of this bill because I have not heard an argument from the opponents here today that was not anticipated and addressed in this actual bill before us You know we heard a lot about complexity and concerns that this would be too hard to change the system but the bill has five different options for how you can comply with it and some of them are very simple If Visa and MasterCard change their fee schedules, which everybody uses, and just says we're not doing percentage-based fees anymore, everyone's in compliance. That's a very simple change that they can do to make sure that everything works on this. They may not want to do it because it's lucrative to have percentage-based fees, but complexity is not the barrier for this working here. We've also heard a lot about small banks and credit unions and trying to make sure that things work for them. I can tell you that exemptions for small banks and credit unions when it comes to interchange fees work. We did it federally in 2010. The Federal Reserve, which is very friendly to banks, has said multiple times that that exemption is working as intended. We've also heard concerns from the small banks and credit unions that Visa and MasterCard might screw them over if this reform happens, but the bill anticipates that and lets the small banks and credit unions sue Visa and MasterCard to stop them if they are discriminating against or penalizing the small guys. Last issue, just on the legal aspects of this, the court in Illinois is very clear. Interchange fees are different from every other type of fee in which there has been federal banking law preemption found. These fees are different because they're set by Visa and MasterCard on behalf of the banks. Banks don't set their own fee rate. That's why states have authority to regulate them. That's why we've seen bills like this pass out of committee in Delaware, Pennsylvania, and Oklahoma, red, blue, purple states in the past few weeks. Thank you, Madam Chair.
Thank you. We have two online participants for this panel. I actually would just welcome all of the rest of the proponents who are online or in the room, as this is the last panel. Chris Carran, please.
and thank you for allowing me to testify i'm the executive director for colorado independent liquor stores a small business owner in summit county and we operate a small farm in western colorado small businesses in colorado are in peril we're being attacked by national chains huge corporations price increases through tariffs and higher gas prices will also cost us We all try to pay a living wage and retain employees, but it's getting harder and harder. Who ultimately suffers in these instances? The Colorado consumer. These people are forced to use credit cards, especially as the cost of just trying to live gets higher and higher and it gets harder to make ends meet. As you've heard, we're required by law to collect, report and remit sales tax to the town, the county and the state. We no longer get compensation for the cost of doing that. Yet the credit cards make us pay to fulfill this duty. Swipe fees are based on the number of transactions per month and the average size of those transactions. A small business can pay anywhere between 2% and 4%, costing us thousands of dollars per year to collect that sales tax. Ultimately, we have to pass that cost onto the Colorado consumer. We are not trying to eliminate swipe fees. That's a cost of doing business. We are only asking for relief on the close to 10% of every transaction on a credit card that goes to sales tax. Ultimately, that would save a business like mine thousands of dollars per year. Mine alone would save over $5,000. That money could be used to increase wages, lower product costs to the consumer, or hire new help. We heard a lot about the cost and complexity of implementation of this bill to Visa and MasterCard but one option put forth by the sponsors is for the retailer or restaurant to apply for a rebate on the swipe fees on sales tax In my eyes, that would be easy. I'm asking you to please pass Senate Bill 26134 for all Colorado small businesses and ultimately for the Colorado consumer. Thank you.
And to our last witness, please proceed.
Madam Chair and members of the committee, thank you for this opportunity to testify. My name is Chris Lanter. I'm the chef and co-owner of Cash Cash Restaurant in Aspen, an operating partner at Home Team Barbecue of Aspen. Between the two restaurants, we employ over 150 local residents who are the backbone of our community. Home Team opened in 2016 and Cash Cash opened in 1987. Cash Cash is now among a handful of independently owned and opera restaurants and independently owned restaurants in Aspen, and much has changed since 1987, and it's not getting any easier. Food prices have skyrocketed over 35% since COVID. Hiring in mountain towns is a formidable task due to a lack of affordable housing. Labor costs are through the roofs. Rents and insurance have never been higher. We're being squeezed from all directions, not to mention the current record low snowpack and future Aspen airport closure, which have and will have direct impact on our tourism industry. In addition to all of these challenges, we're paying enormous fees every time a customer swipes a credit card at our restaurants. And even more disturbingly, we pay swipe fees on the sales tax that we collect and remit to the government. We receive no assistance to cover the cost of providing this service. This is taxation without representation. Swipe fees continue to rise year after year, and these fees add up to tens of thousands of dollars. In 2025, Home Team paid around $12,000. Swipe fees on sales tax alone, Cash Cash was around $8,000. Meanwhile, Home Team, we pay $155,000 in credit card processing, so we're happy to pay that, but we just don't want to pay it on the sales tax. This bill is a common sense measure that keeps Colorado restaurants from paying swipe fees on the sales tax dollars that we don't even keep. It provides relief at a time when we need it most. On behalf of all restaurants in our great state of Colorado, I urge you to support Senate Bill 26-134. Thank you very much for this opportunity to testify here
today. Thank you all for being here. Are there questions from the committee for this panel?
Senator Judah. Thank you, Madam Chair. My question is for Lauren. And comment first, if you could please bring back your portobello po' boy.
Let the record show we will.
Thanks. Okay, my real question, however, is you mentioned how much you would save, which is a significant amount in the restaurant world.
Can you give us an example?
We've heard from quite a few restaurateurs of what they would do with that money, labor, advertising, expansion, all of that kind of stuff. Can you give us a comparable amount of something else in your overhead that equals around the same of what you're paying in these fees? Yeah, I can.
Thank you for the question.
So, you know, for us, the very real issue is labor, and the very real cost is labor. if you've been to a restaurant recently or a restaurant in Colorado you may have noticed half the people are working and it's like everyone's running around like their hair is on fire because We cannot sustain the same type of team we once could. For context, in 2019, we had 200 employees, and today we have 70. And it costs us about the same to employ those 70 people as it did for 200. So what that would mean immediately is more labor hours to our staff that desperately need it. So we could offset the overhead that way. The other costs we have, insurance, cost of services, taxes. our cost of goods have all gone up substantially. And I think it's very acute in Denver, but it's across the state. And it is runaway inflation that is in dire need of adjustment. And I implore you all to consider that and consider this as a very easy way to accomplish that.
Senator Linsett.
Thank you, Madam Chair. And Mr. Swanson, one of the issues that came to mind when I was working on this bill is just the increase in interchange fees that we've seen year after year as more Americans use credit cards to cover essentials. I just wanted you to opine on the increased use of credit cards and the continued rising of these fees and their necessity. That's what has created so much urgency on this issue.
So Federal Reserve says about two-thirds of all payments now across the country are made by card. In some industries like restaurants, it's over 80% now. and these are percentage-based fees that deduct money from every card transaction that's made. So as inflation goes in and prices go up, more is taken out in fees. So as more cards are being used and as these are percentage-based fees, taking more and more, collecting more fees, that's a problem. But the fee rates themselves are going up too, and Visa and MasterCard claim that it's not, but there's an analyst called the Nielsen Report. It's the best industry analyst that we have right now, which said from 23 to 24, the rates, the average rates for Visa and MasterCard credit cards went up nine basis points. So you combine more cards, percentage-based fees, and the rates going up, and that's just a sustainable situation for merchants. And one other quick point, talking about how this bill anticipates some of the concerns that we heard from the small banks and credit unions, we heard a lot of them were concerned about the federal exemption that was created because they partner with big banks to issue their cards. The big banks, it seems, do a lot of work, but they brand the card with the small banks' cards. and the small guys don't want that relationship to be disrupted. But the sponsor's bill deals with that. Those are exempted under this bill. They're grandfathered in. If those branding arrangements are already done, they are subject to the exemption. So I feel like the bill has bent over backwards to try and accommodate preserving the ability of the small guys to compete against the giants. But if you want to get fee relief for merchants and restaurants, that has to come from somewhere. This bill targets that at the top 40 biggest banks in the country, and that's it. Everybody else is exempted from this, and we think that exemption would work.
Are there any further questions for this panel? I have one question, if it's okay. Something that I think only two people talked about in this entire time was, and I believe the term was paybacks. Was it? Chargebacks. Chargebacks, thank you.
Could you talk a little bit more about that and how that is impacting our businesses isn't what the bill would help with maybe? Yeah, and I suspect every merchant and restaurateur here would have a lot of stories to say about chargebacks. So this is a fraud scenario, what happens here. Under Visa and MasterCard's rules, if somebody goes to a restaurant, sends $100, buys food, and then later claims this was a fraudulent transaction, I didn't do it, it wasn't me, that money is taken back from the merchant account The money that was transferred from the card to the merchant account is clawed back and then they have a dispute process to see whether or not who is responsible for the transaction where it should lie More often than not, we have stats on the debit side that come from federal regulation. More often than not, that fraud loss is charged back to the merchant or the cardholder 72% of the time. Banks don't actually bear the majority of fraud that happens.
Thank you so much. Well, that was our last panel. we're going to take a quick senatorial five for our chair so the sponsors can come back up thank you so much thank you Thank you. Thank you. Thank you Thank you. Thank you. folks welcome back we'll go ahead and close the witness testimony phase and move on to amendment phase sponsors do you have any amendments okay members do you have any amendments senator listen thank you madam chair yes I have a A couple of amendments. Start off with, wait so you can get it. Please tell us about L-001. Very good.
Madam Chair, I'll move amendment L-001 to Senate Bill 134. Members and what this has to do with reporting and revenue monitoring Colorado has one of the most complex tax structures with more than 700 different taxing entities across the state with sales, use, and excise and occupational taxes. This bill is a fundamental change, which has been talked about. This amendment ensures that the state and local governments are not losing any revenue and ensures that taxes are actually being remitted. It provides real-time data to make sure that there isn't an implementation issue with the First Nation change, First Nation change, which is what this bill represents. So I ask for an aye vote because we want to make sure that the reporting and the revenue that is coming in, that it's properly accounted for, which I'm sure that the sponsors would want as well. So I want to ask for an aye vote.
Senator Lindstedt.
Thank you, Madam Chair, and thank you, Senator Liston. You know, this is the first time I am seeing this amendment. I'd be happy to discuss it with you further down the process, but at this time I think we'd have to ask for a no vote. Further questions on L-001?
Seeing objection to L-001, and he did move it,
so Ms. Chapman, please call the vote. Senator Catlin. Yes. Judah. No. Liston. Aye.
No. Madam Chair. I just want to say I'm open to the ideas down the road, but because I'm unfamiliar with the details, I'm going to be a no on this amendment. But welcome further work down the road. No.
And that vote fails on a vote of three to two. Or two to three, rather. Senator Liston.
Very good. Then I will also move Amendment L-002 to Senate Bill 134.
Okay. Do you want to tell us about what L-002 does? This has to do with the point-of-sale system implementation.
And because of the complexity, businesses will have to make significant updates to their point-of-sales systems and will need clarity on compliance. This requires the state rulemaking to ensure that if you are a large retailer, be it Walmart or Target or a local restaurant, that you can comply. This is especially important since Colorado has removed its vendor fee and small businesses don't have additional support to help with compliance. It makes sure that the state is clear on how to implement this bill. So I ask for an aye vote.
Senator Linstead.
Thank you, Madam Chair, and thank you, Senator Liston, for working on this bill and for your consideration. Again, this is a bit of a surprise to me as the sponsor, and I would love to have these discussions with you before this bill hopefully moves to the floor. But at this time, I have to ask for a no vote.
Senator Liston.
Liston. Yeah, Liston and Lindstedt. We're not brothers. well and I appreciate that and I'm not trying to you know ambush anything like that I just wanted to get it on the record and that that hopefully between now and when the bill does come to the floor that we can consider you know amendments like this very good so similarly I would say if the bill advances today that I'm looking forward to some amendment ideas but on short notice with the request of the sponsors to get
down the road. I'll also be a no vote, but acknowledge that the opponents were working on something here. I applaud that. I want to see it down the road, but just on this short notice, I'll be a no on this for today. So, did you move? Okay.
Ms. Chapman, please call the roll. Senator Catlin. Yes. Judah. No. Liston. Yes. Winstead. No. Madam Chair. No.
amendment L002 fails on a vote of two to three. Are there any other amendments from the committee? Okay. We'll close the amendment phase. Sponsors wrap up comments. Senator Linstead.
Thank you, Madam Chair. You know, we've heard a lot today. So I don't, I don't have too much to add. I do just want to go back to the central question of this bill, which is fundamental fairness. We are in a taper state where our voters approve sales tax increases to fund critical public programs, whether that's SCFD or construction for schools or public health measures, whatever it is, for local government, state government, voters approve those sales taxes. And I just don't think it's very good behavior to be making money on sales taxes when voters approved them for specific purposes. So I think this is an issue of fairness. I think our retailers and small businesses are collecting and remitting those sale taxes at their own cost and their own liability, and it's only fair to ask the largest banks in the country not to make money on those sacred tax dollars here in our state. So I ask for an aye vote. Again, we'll continue dialogue with the opponents to make this bill implementable and successful to save Colorado businesses and consumers money.
Senator Judah.
Thank you, Madam Chair, and thank you, members of the committee, for hearing this bill. I also want to thank our witnesses, both opponents and proponents. There was a lot to hear today, and I know this bill can get fairly technical. um i just want to close by saying this hits close to home for me i grew up in a small business this is how my parents paid for their children's college and i distinctly remember when we got a credit card machine um at the same time i distinctly remember having a conversation with my father about the fees that we had to pay. And I asked him, is it even worth it to have this machine? Maybe we just stick to cash and check only. And we understood that there was a change in time. We understood that a lot of more people were moving towards credit card and wanting to pay that way So we adapted and you know we did what we had to do but it wasn lost upon me even as young as I was at the time that it was impacting our income and our business and our bottom line and what we could actually be doing with that money So when my co-prime asked me to join the bill, I started to think about how this took me back down memory lane. and as I heard our restauranteurs and our small business owners talk about it, it brought me back to, you know, when I was working in our deli and in our small grocery store, swiping those credit cards every single time, cringing just a little bit, knowing that there was something getting taken away from my college fund or from our groceries that month or from being able to hire extra help. So with that, I kindly ask for an aye vote.
And again, thank you so much for listening to SB 134. Senator Liston, brief remarks.
Very good. Thank you, Madam Chairman, and thank you committee members, even the new committee member for the day. You know, I'm glad you're here, but, you know, things happen. Well, every time that we hear a piece of legislation, we all learn something, you know, pro and con. So, you know, you raise the level of awareness. And I know it wasn't your intent, but I heard it from a number of the witnesses and stuff, how evil the big banks are. I'm, you know, tongue in cheek. But in defense of the big banks, they're not all evil. They do a lot of good here in Colorado. They employ tens of thousands of people, and a lot of the small businesses in this room as well as all over the state of Colorado would not be in business without be it the large banks or the medium banks or the small banks. And I know it's not the intent that this is an anti-banking bill. It's not, but the big banks do serve a purpose. They give back tens of millions of dollars, and I'm not being told to say any of this. So they do a lot of good here in Colorado, a lot of good, as do all the banks and the credit unions as well. So I just didn't want to – I really feel for the restaurant industry and the people from the restaurant industry as I look through the audience. You know, I've always been a big supporter of the restaurant industry. I not only support you, but I go to your restaurants financially, and I never object to what I have to pay. But I think and I feel for, you know, I mean, you're in business. You want to make money. You know, I'm a capitalist. Capitalism is good, and profit is good. I will always defend that. So I want you to be profitable. However, as I look at this, and I don't blame you for wanting to keep that extra one and a half two percent whatever it may be but I think that unfortunately what is really hurting us here in Colorado and the restaurant industry or the small businesses it's not this interchange fee that the processors get. But what has really come to roost, and it's been said here repeatedly, are the increased labor costs over the years where we've jacked up the minimum wage year after year after year, especially in the Denver area. I know, I mean, I walk down Colfax not very often anymore, and you see all the restaurants that are closed, or you go down the 16th Street Mall. That is the unintended consequence of these higher minimum wage increases that have been pushed on businesses, as I've been here for a number of years. And we said repeatedly, if you raise that minimum wage to $19, $20, $22 an hour, it's going to come back and it's going to bite businesses. and I'm sure that you will agree that it has when you're having to pay people $20, $22 an hour plus, you know. So that is really a real kick in the teeth of the restaurant industry as small businesses. You look at the rent and the occupancy, that's gone up because we put more and more, the legislature has put more and more rules and regulations on the landowners, on the property owners. That too has come back to bite us. The insurance costs. This legislature over the years has gone after the insurance industry year after year saying, oh, these insurance companies, it's all their fault. So what have they had to do? They've had to kind of raise their prices, and it comes back to bite small businesses. Payroll taxes, the list goes on and on and on. So while I fully empathize with what small businesses are going through, This bill, you know, I have my Carnac hat on. There's no doubt this bill is going to pass today. I mean, I knew that when Senator Lindstedt walked in the door. But this is just the first battle, even when it passes here, and should it pass the legislature, this battle is far from being done. So I would encourage the small business owners, don't think that just because this bill passes that you're home free. I mean, I wish you could be, but this is going to be litigated to the nth degree for a long time to come. So while I appreciate where you're coming from, I don't blame you in a way I can understand it. I don't think that this is the way to help small business. I think also and I want to especially make a comment about what's going to happen to the in the credit card industry. I think that the credit card providers whether it to your banks your small banks or large banks or whatever they going to really tighten their standards There going to be a lot of people that will not be able to even get a credit card And last but not least it going to come back and really hit the tourism industry There's a lot of people. It was testified. Millions of people come to Colorado. I want to finish, ma'am, with all due respect. I want to finish. I don't care. I want to finish. I want to finish, please. I sat here patiently for two and a half hours. another couple minutes with due respect. But I think that it's going to really hurt the tourism industry. When people come to Colorado from outside and they're going to lay down their credit card from an out-of-state bank and the businesses are going to say, hey, we can't accept that credit card anymore and it's going to blow up in our face. So I'm not here to belabor things with all due respect, but I think this bill is well intended, but this is not the way that's going to help small business. Really, the way to help small business is to get less rules and regulations, get off their back, out of their pockets, Let them run their businesses that they know how to do and get the government out of the various industries, and we would all be succeeding much more. Thank you very much.
Okay. And I just wanted to say thanks to everyone real quickly for coming. It was a long testimony day, and I understand a lot of the concerns, And I told the opponents today that the concerns from my district and the constituents that I represent are right now overwhelming in favor of this bill as a consumer protection measure. And so I understand there may be future work to try and accommodate some of the concerns that were illustrated by the opponents. And I applaud that effort. But for today, I'm going to support the measure in the good faith that it will accomplish much of what the sponsor is set to accomplish, and also that the folks around the state are urging us to do this in the name of consumer protection.
Okay. Any further comments? No? Okay. Okay. Oh, I'm so sorry.
Thank you, Madam Chair. I move SB 134 to the Committee of the Whole with a favorable recommendation.
That is a proper motion. Ms. Chapman, please poll the committee.
Senator Catlin. No for Judah. Judah. Yes. Liston. No. Lindstedt. Aye. Madam Chair. Yes.
That passes on a vote of 3-2. You are headed to the floor. Okay, seeing no further business for this committee today, the Business, Labor, and Technology Committee will be adjourned.