DENVER – The Colorado General Assembly last week introduced legislation that seeks “a first-in-the-nation exemption” for retailers from having to pay swipe fees on local taxes they collect.
The Denver Business Journal reports that the legislation “sets up a battle” between businesses — who maintain that they “should not have to pay thousands of dollars per year to the banks that issue credits on tax revenues that they simply collect and pass through to the state” — and Colorado bank executives, who say the measure would require them to offer a service for free.
Former NACS Chairman Dave Carpenter, franchisee of six 7-Eleven stores in the Denver area, told the news source that it's “unfair for credit-card companies and banks to profit from transactional revenue that businesses don't get to keep.” He said retailer members of NACS have urged Congress to pass meaningful swipe fee reform legislation in recent years, and that those efforts led to the enactment of the Durbin Amendment.
Carpenter added that the Colorado bill has the potential to save small business owners thousands of dollars annually, and that those savings would be passed on to customers in lower prices.
"We shouldn't have to pay for the privilege of collecting the state's taxes," he told the news source, adding that although the banks and credit card companies provide a service, “they charge an exorbitant amount for that service ... It's not a solid way of doing business."
On the opposing side, Jenifer Waller, senior vice president for the Colorado Bankers Association, said that swipe fees cover services like fraud protection. "Interchange covers all that convenience and protection," Waller said. "Basically, this bill requires us to provide a service for free."
Waller added that the bill would be bad for small businesses because they would have to pay for technology upgrades that separate taxes from other payments they accept when determining interchange fees.
Tony Gagliardi, state director of the National Federation of Independent Business, countered Waller’s comments, noting that small businesses would save far more with lower swipe fees than they would in paying for that upgrade.
"Taxes are for the benefit of the public good, not so credit card companies and payment networks can make more money off them," Grier Bailey, government affairs manager of the Colorado Wyoming Petroleum Marketers Association, told the Denver Post.
If passed, the law would take effect in July 2017.