Committee Deflates Colorado Swipe Fee Bill

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Committee Deflates Colorado Swipe Fee Bill


DENVER — An attempt to block processors from collecting swipe fees on the state's sales tax has fallen flat. 

The House Finance Committee took up the issue, House Bill 1154, on March 4, and discussed the idea of conducting a study on the measure instead. However, even that move was eventually defeated nine to two because there is little money to do the study, according to the Denver Post.

The goal of House Bill 1154 was to cut the fees processors charge retailers every time a customer pays with a debit or credit card.  The measure would have been the first of its kind in the United States, as CSNews Online previously reported.

The committee vote came after several testifying at the hearing raised objections to the study. According the news report, bankers called a proposed study of interchange fees "biased" and "unfair" because the outcome appeared to be predetermined toward legislating the interchange fees.

"The consumer does not win in this case," said Koger Propst, president of ANB Bank. "This is a fairness issue. These are voluntary business contracts, and when did it become good for a state to step into that, and where does that stop?"

Even after voting the measure down, state Kit Roupe (R-Colorado Springs) said there are issues that need to be addressed.

Backers said the study, while helpful, didn't answer the question of whether it's appropriate for a bank to make money for collecting taxes, the Denver Post added.

Merchants complained that last year they unfairly paid at least $25 million in interchange fees on the $2.1 billion the state collected in sales taxes.

On the other hand, bankers say it's unfair to expect them to provide a service — guarantee merchants and the government their payment from the transaction — without the bankers being paid, according to the newspaper.

As CSNews Online previously reported, the state already pays retailers 3.33 cents for every sales-tax dollar they collect and remit on time. However,  Colorado's other taxing bodies — from municipalities and counties to special tax districts — do not.

By law, governments are allowed to assess a convenience charge on credit card payments to recoup interchange fees. This assures the government collects 100 percent of its assessment when a consumer pays their bill — property taxes, vehicle registrations and utility bills among them — with a credit card and not a discounted amount because of the swipe fee.

However, Colorado and 11 other states prohibit retailers from assessing the same fee, leaving them to subsidize the cost of collecting the government's tax.