Colorado governor vetoes interchange fee bill

Colorado Gov. Jared Polis vetoed a bill last week that would ban collecting interchange fees for sales taxes. .A Democrat, Polis said the law caused too much legal risk to the state’s consumers and business environment. The legislation, passed last month by the Colorado General Assembly, would have applied to payment card networks and financial institutions with more than $60 billion in assets. The bill would have required retail businesses with more than 500 statewide employees to apply savings resulting from the bill to cutting prices for consumers or investing in employee wages or benefits. The proposal was modeled after similar interchange legislation in Illinois. Last week, the Illinois General Assembly delayed implementation of the interchange fee ban for the second time, this time until July 1, 2027. The Office of the Comptroller of the Currency and National Credit Union Administration have found that federal law preempts the legislation for non-state-chartered financial institutions. The U.S. District Court for the Northern District of Illinois recently granted a permanent injunction against enforcing the law for banks chartered outside the state. Polis cited the court’s finding in his veto. “Even if the bill were to survive legal scrutiny and go into effect in our state, it is questionable whether this bill is fully implementable or operationally feasible,” he said. “This would be a Colorado-specific-carveout to the national and global integrated payments system and it is unclear to me how the state would implement it.” Banking trade groups supported the veto. The law would have disrupted the state’s payments system and negatively impacted Colorado’s consumers, small businesses and community banks, according to a statement from the Independent Community Bankers of Colorado and Independent Community Bankers of America. American Bankers Association President and CEO Rob Nichols said the veto spared Colorado from an expensive court battle and payment chaos. He said the veto, along with the Illinois court ruling, “should send a clear message to any other state contemplating similar legislation that it is a mistake.”The Merchants Payments Coalition disagreed with the veto. “It is unfortunate to see the will of the people of Colorado blocked at the finish line when affordability is a key issue for people,” said Executive Committee member Doug Kantor.