Colorado Gov. Jared Polis vetoes bill targeting credit card interchange fees
In a win for advocates of the global integrated payment system, Colorado Gov. Jared Polis vetoed Senate Bill 26-134 on Wednesday night, preventing a law from taking effect that could’ve upended the way both Colorado residents and its millions of visitors pay for goods and services on a daily basis.
The “Payment Card Networks’ Fees” bill would’ve prohibited interchange fees from being imposed on the tax portion of a credit card transaction, a change that could have forced consumers to use multiple payment methods for a single purchase.
“The bill presents too much legal risk to Colorado’s business environment and consumers, with limited upside for our small businesses, for me to be comfortable signing,” Gov. Polis said in a letter detailing his rationale.
The veto comes as many similar efforts at the federal level — most notably the Credit Card Competition Act — have stalled.
However, states have largely become the new battleground for these pieces of legislation.
In fact, Gov. Polis’ letter highlights the ongoing uncertainty facing the only state (Illinois) to have passed such a bill to date.
In Illinois, the “Interchange Fee Prohibition Act” (IFPA) — passed two years ago and originally slated to take effect July 1, 2026 — would’ve exempted both the tax and tip portions of a transaction from interchange.
Earlier this week, the Illinois legislature voted to delay its implementation until 2027, and just a few hours later, a federal judge issued a permanent injunction on the law.
“The ongoing legal and legislative developments of lFPA create unstable grounds for passage and implementation of SB 26-134 in Colorado,” Gov. Polis said in his letter.
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Nationwide, credit card processing fees for merchants average just over 2%. In exchange, issuing banks and credit card networks like Visa and Mastercard fight fraud, cover their lending costs, and, most notably to us here at TPG, use them to fund credit card rewards.
Efforts to overhaul this system would put these popular rewards programs at risk and could even reduce the amount of financing available to Americans. Both of these factors were cited by Gov. Polis in his letter.
TPG founder Brian Kelly also applauded this veto as a win for consumers.
“Millions of Americans rely on credit card rewards for travel or to support their household’s bottom lines,” he said. “This bill would’ve injected significant confusion into what is currently a seamless payment process in the state, and by vetoing it, Gov. Polis sent a strong message to his constituents and tourists — that Colorado values points as much as we do here at TPG.”
While this bill isn’t taking effect, other efforts to upend the electronic payments system remain under consideration at the state and federal levels.
To learn more and weigh in, visit Protect Your Points.
