The Colorado House has recently approved a bill aimed at reducing financial burdens on small businesses by addressing inflated card transaction fees. Known as the Swipe Fee Fairness and Consumer Safeguards Act, this legislation seeks to prevent payment networks from fixing fees with credit card issuers, eliminate fees on taxes and tips, and introduce accountability measures. Approved with a significant margin of 43-21, the act is seen as a substantial step towards aiding local enterprises.

This legislation not only aims to protect consumers but also offers relief to small businesses through fairer fee practices. By prohibiting fixed swipe fees, banning charges on tax and tip portions, capping charitable donation fees, and providing legal recourse for affected entities, it strives to create a more balanced environment between merchants and card companies.

Reforming Payment Practices: A Step Towards Economic Justice

The new bill addresses critical issues within the credit card transaction system that disproportionately affect small businesses. It prohibits the practice of payment card networks collaborating with credit card issuers to fix interchange fees. This measure ensures that small businesses are not unfairly penalized when processing card transactions, which can lead to substantial savings annually.

Moreover, the act bans the application of interchange fees to sales tax and gratuity portions of transactions. This move prevents banks from unjustly profiting off merchants who collect and remit taxes to the state. In addition, the legislation mandates that no fees related to disputed transactions be charged until the disputes are fully resolved and consumers receive written notifications. Such provisions aim to protect both merchants and consumers from unnecessary costs and ensure transparency in financial dealings.

Empowering Small Businesses Through Legislative Action

HB25-1282 introduces several mechanisms designed to empower small businesses against the monopolistic practices of major credit card companies. By capping interchange fees on charitable contributions and allowing merchants or consumers to sue payment card networks for damages, it provides much-needed support to struggling enterprises. The bill also limits interchange fees to 0.2% for debit cards and 0.3% for credit cards when used for charitable donations, fostering a more equitable financial landscape.

With Coloradans paying $2 billion annually in swipe fees due to lack of market competition, this legislative action becomes crucial. Visa and Mastercard dominate over 80% of the credit and debit card markets, leading to price matching and fixed swipe fee rates that burden merchants and consumers alike. By eliminating swipe fees on taxes and tips, capping fees on charitable contributions, and prohibiting price fixing by card networks, HB25-1282 aims to deliver substantial relief to small businesses. As one of more than seventeen states pursuing similar laws, Colorado is taking a significant stand to protect its local economy and promote fair pricing practices.