HB25-1282: A Win for Colorado’s Small Businesses and Economy

Small businesses are the backbone of Colorado’s economy, yet on the campaign trail, many business owners approached me and asked for help with their struggle under the weight of excessive fees imposed by large financial institutions.

HB25-1282 Payment Card Network Practices & Fees is a critical step toward fairness, ensuring that businesses are no longer charged unnecessary interchange fees on taxes and tips - money they do not keep.  I’m pleased to report that my bill has passed in committee with a 9-3 vote and is now headed to the House, where I expect it to pass before advancing to the Senate.

Despite exaggerated claims from opponents, this bill is a commonsense reform that promotes transparency, economic growth, and competition while eliminating an unfair financial burden on merchants.

Currently, businesses pay swipe fees not only on their actual sales but also on taxes and tips, which are funds that go to the government and employees. HB25-1282 eliminates these unnecessary fees, preventing financial institutions from profiting off money that was never theirs to begin with.

Small businesses already operate with tight margins, and this bill restores fairness by limiting banks’ ability to impose fees on non-sales portions of transactions. By reducing these costs, businesses will have more financial flexibility to reinvest in their operations, hire more employees, raise wages, or offer lower prices to consumers.

The financial industry has attempted to discredit HB25-1282 by making exaggerated claims about its impact. One of the most misleading arguments is that implementing this bill would require costly infrastructure overhauls.

In reality, modern payment processing technology already allows for itemized tax and tip exclusions in Level 2 and Level 3 transactions. Major payment processors routinely update their systems for compliance, and this adjustment would be no different.

Additionally, opponents falsely claim that businesses would need to process transactions separately or invest in new terminals. This is simply not true, as existing point-of-sale systems already distinguish between taxable sales and gratuities.

Another argument against the bill is that it could harm credit card rewards programs, but this claim is misleading. Rewards programs are funded through inflated interchange fees, which drive up prices for all consumers, including those who do not use credit cards. Businesses should not be forced to subsidize corporate rewards programs at their own expense.

Similarly, opponents argue that Colorado already has a surcharge law that allows businesses to offset interchange fees by passing costs onto consumers. However, that law does nothing to prevent banks from charging interchange fees on taxes and tips in the first place. HB25-1282 ensures financial institutions can no longer profit from money that was never part of a business’s revenue.

Another concern is that banks will simply raise other fees to make up for lost revenue, but HB25-1282 includes provisions to prevent financial institutions from shifting costs elsewhere. Past regulatory efforts have shown that when transparency is enforced, banks and processors can be held accountable. The bottom line is that small businesses should not be forced to pay fees on money they do not keep, and financial institutions should not be allowed to profit from state taxes or workers’ tips.

Below is a list of opposing viewpoints and the informed counterpoints:

❌ "This bill would require costly infrastructure overhauls."

✅ False. Modern payment processing technology already allows for itemized tax and tip exclusions in Level 2 and Level 3 transactions. Major payment processors make frequent system updates for compliance - this would be no different.

❌ "Merchants will need separate transactions or new terminals."

✅ False. Existing point-of-sale systems already identify tax and gratuity separately as part of ISO 8583 compliance. This bill does not change how businesses process payments.

❌ "Consumers will lose their credit card rewards."

✅ Misleading. Rewards programs are funded through inflated interchange fees, which ultimately raise prices for all consumers, whether they pay with credit or not. Businesses should not be forced to subsidize corporate rewards programs at their own expense.

❌ "Colorado already has a surcharge law that addresses this."

✅ Misleading. The existing surcharge law allows businesses to pass costs onto consumers but does not stop banks from applying interchange fees on taxes and tips. HB25-1282 ensures that financial institutions can no longer profit from money that isn’t theirs.

❌ "Banks will find other ways to raise fees."

✅ This bill includes provisions to prevent financial institutions from shifting costs elsewhere to undermine its intent. Past regulatory efforts have proven that banks and processors can be held accountable when transparency is enforced.

This bill is a commonsense, pro-business reform that puts money back into the hands of job creators, employees, and local communities instead of Wall Street banks. I have championed this effort from the start and will continue fighting for small businesses.

The opposition is relying on misinformation and fear tactics to protect their profits, but Colorado lawmakers must stand with small businesses and pass HB25-1282 to promote a fairer, more transparent financial system.