House Bill 25-1282 Engrossed

A Bill for an Act

• Page 1, Line 101Concerning prohibitions on certain payment card network

• Page 1, Line 102practices involving electronic payment transactions.

Bill Summary

(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)

The bill enacts the "Swipe Fee Fairness and Consumer Safeguards Act" (act), which prohibits a payment card network from:

• Fixing or conspiring to fix an interchange fee with, or on behalf of, a covered credit card issuer or another payment card network;
• Establishing, putting forward, or implementing a fee schedule that the payment card network knows, or reasonably should know, has been used by a covered credit card issuer other than the payment card network to determine the amount of an interchange fee charged or received by the covered credit card issuer in the current or previous calendar year;
• Establishing, charging, or putting forward on a fee schedule an interchange fee if the fee includes a percentage multiplied by the amount of a transaction and the fee does not exclude any amount attributable to a tax or gratuity on the transaction, or increasing fees in an attempt to or in a manner that would circumvent such interchange fee prohibition;
• Requiring a merchant that accepts credit cards that are enabled for processing over the payment card network to accept all credit cards issued by a covered credit card issuer that are enabled for processing over the payment card network;
• Distributing, publishing, or otherwise using data from an electronic payment transaction, except in certain circumstances;
• Charging a fee to a consumer or merchant related to a disputed credit card transaction until the dispute has been resolved and the consumer or merchant has been provided written notice of the determination; or
• Imposing a penalty on a merchant for setting prices in a manner that complies with state and federal law.
• 0.2% of the amount of a charitable contribution made by means of a debit card; or
• 0.3% of the amount of a charitable contribution made by means of a credit card.
• The greater of:
• The amount of actual damages sustained plus interest; or
• $500; or
• 3 times the amount of actual damages sustained if the payment card network engaged in bad faith conduct; plus
• The costs of the action plus reasonable attorney fees.

The bill prohibits a payment card network from establishing, putting forward, or implementing a fee schedule that the payment card network knows or reasonably should know has been used by one or more issuers other than the payment card network to determine the amount of an interchange fee received or charged in respect to a charitable contribution, unless the interchange fee does not exceed:

If a payment card network violates the act, a merchant, consumer, or other individual or entity that is injured as a result may bring a civil action. A payment card network that is found to have violated the act as a result of a civil action other than a certified class action is liable in an amount equal to the sum of:

If a payment card network is found liable in a certified class action, a successful plaintiff may recover actual damages, injunctive relief allowed by law, and reasonable attorney fees and costs.

• Page 3, Line 1Be it enacted by the General Assembly of the State of Colorado:

• Page 3, Line 2SECTION 1.  In Colorado Revised Statutes, add 5-2-215 as follows:

• Page 3, Line 35-2-215.  Prohibition on certain payment card network

• Page 3, Line 4practices - short title - legislative declaration - definitions. (1)  Short

• Page 3, Line 5title.The short title of this section is the "Swipe Fee Fairness and Consumer Safeguards Act".

• Page 3, Line 6(2)  Legislative declaration.The general assembly finds and declares that:

• Page 3, Line 7(a)  Colorado merchants and consumers paid an amount

• Page 3, Line 8estimated to be over two billion dollars in credit card

• Page 3, Line 9interchange fees in 2023 and paid an amount estimated to be over

• Page 3, Line 10two hundred million dollars in interchange fees collected on sales tax in 2023;

• Page 3, Line 11(b)  Interchange fees act as an inflation multiplier by

• Page 3, Line 12adding two to four percent in additional costs to every credit

• Page 3, Line 13card transaction a merchant runs. High interchange fees cost

• Page 3, Line 14the average family over one thousand one hundred dollars in the cost of goods and services last year.

• Page 3, Line 15(c)  In recent years, Colorado restaurants have been

• Page 3, Line 16negatively impacted by factors including the COVID-19

• Page 4, Line 1pandemic and rising costs for labor, food, and rent. More than

• Page 4, Line 2four hundred twenty-five Colorado restaurants closed over

• Page 4, Line 3the last three years, resulting in an estimated twenty-one thousand two hundred fifty workers who lost their jobs.

• Page 4, Line 4(d)  The restaurant industry is made up of hundreds of

• Page 4, Line 5thousands of small businesses that run on different business

• Page 4, Line 6models. Seven in ten restaurants are single unit operations, and

• Page 4, Line 7ninety percent of restaurant locations employ less than ten

• Page 4, Line 8people. The industry is highly competitive and constantly

• Page 4, Line 9changing in response to trends and economic pressures. The

• Page 4, Line 10average small business restaurant runs on a three- to

• Page 4, Line 11five-percent pre-tax margin and makes about one million dollars in annual sales.

• Page 4, Line 12(e)  For restaurant operators, accepting debit and credit

• Page 4, Line 13cards is imperative to best serving customers and staying in

• Page 4, Line 14business. However, accepting debit and credit card payments is

• Page 4, Line 15one of the highest costs borne by restaurant operators, often

• Page 4, Line 16behind only labor and food. Two payment card networks

• Page 4, Line 17control over eighty percent of the credit card marketplace in

• Page 4, Line 18the United States, forcing merchants to pay the highest

• Page 4, Line 19interchange fees in the industrialized world. Restaurant

• Page 4, Line 20operators do not have the bargaining power to negotiate the

• Page 4, Line 21credit card rates imposed by the two dominant payment card

• Page 4, Line 22networks, nor are restaurant operators practically able to find alternative payment processing options.

• Page 4, Line 23(f)  This section benefits Colorado merchants and

• Page 4, Line 24consumers by keeping over two hundred million dollars within

• Page 5, Line 1the state and strengthening local economic activity. The act

• Page 5, Line 2will help restaurants in Colorado save money on interchange

• Page 5, Line 3fees paid on sales tax and tips, which will allow restaurant

• Page 5, Line 4operators to hire more employees, invest in their businesses, keep

• Page 5, Line 5prices competitive, and contribute to the communities they serve.

• Page 5, Line 6(3)  Definitions.As used in this section, unless the context otherwise requires:

• Page 5, Line 7(a)  "Acquirer bank" means a member of a payment card

• Page 5, Line 8network that contracts with a merchant for the settlement of

• Page 5, Line 9electronic payment transactions. An acquirer bank may

• Page 5, Line 10contract directly with merchants or indirectly through a processor to process electronic payment transactions.

• Page 5, Line 11(b)  "Authorization" means the process through which a

• Page 5, Line 12merchant requests approval for an electronic payment transaction from the issuer.

• Page 5, Line 13(c)  "Bad faith conduct" means fraudulent, willful, knowing, or intentional conduct that causes injury.

• Page 5, Line 14(d)  "Charitable contribution" means a charitable

• Page 5, Line 15contribution as defined in 26 U.S.C. sec. 170 (c) that is made via electronic payment transaction.

• Page 5, Line 16(e)  "Clearance" means the process of transmitting final

• Page 5, Line 17transaction data from a merchant to an issuer for posting to

• Page 5, Line 18the cardholder's account and the calculation of fees and

• Page 5, Line 19charges, including interchange fees, that apply to the issuer and the merchant.

• Page 5, Line 20(f)  "Covered credit card issuer" means a credit card issuer

• Page 6, Line 1that, during any point in the previous calendar year, held

• Page 6, Line 2consolidated worldwide banking and non-banking assets,

• Page 6, Line 3including assets of affiliates, other than trust assets under management, of more than fifty billion dollars.

• Page 6, Line 4(g)  "Debit card" means a card or other payment code or

• Page 6, Line 5device issued or approved for use through a payment card

• Page 6, Line 6network to debit an asset account and includes a general use

• Page 6, Line 7prepaid card, as defined in 15 U.S.C. sec. 16931-1 et seq. "Debit card" does not include paper checks.

• Page 6, Line 8(h)  "Electronic payment transaction" means a

• Page 6, Line 9transaction in which a person uses a debit card, a credit card, or

• Page 6, Line 10other payment code or device issued or approved through a

• Page 6, Line 11payment card network to debit a deposit account or use a line of credit.

• Page 6, Line 12(i)  "Fee schedule" means any schedule, list, table, chart,

• Page 6, Line 13agreement, communication, or other document, whether

• Page 6, Line 14publicly available or not, that sets forth an amount or formula for determining one or more fees.

• Page 6, Line 15(j)  "Gratuity" means money voluntarily given to an

• Page 6, Line 16employee from a guest, patron, or customer in connection with services rendered.

• Page 6, Line 17(k)  "Interchange fee" means a fee established, charged, or

• Page 6, Line 18received by a payment card network for the purpose of

• Page 6, Line 19compensating the issuer for its involvement in an electronic payment transaction.

• Page 6, Line 20(l)  "Issuer" means a person issuing a debit card or credit

• Page 6, Line 21card or the person's agent.

• Page 7, Line 1(m)  "Merchant" means a person that accepts electronic payment transactions and collects and remits a tax.

• Page 7, Line 2(n)  "Payment card network" means an entity that:

• Page 7, Line 3(I)  Directly or through licensed members, processors, or

• Page 7, Line 4agents provides the proprietary services, infrastructure, and

• Page 7, Line 5software to route information and data for the purpose of

• Page 7, Line 6conducting electronic payment transaction authorization, clearance, and settlement; and

• Page 7, Line 7(II)  A merchant uses to accept as a form of payment a

• Page 7, Line 8brand of debit card, credit card, or other device that may be used to carry out electronic payment transactions.

• Page 7, Line 9(o)  "Processor" means an entity that facilitates, services,

• Page 7, Line 10processes, or manages the debit or credit authorization, billing,

• Page 7, Line 11transfer, payment procedures, or settlement with respect to any electronic payment transaction.

• Page 7, Line 12(p)  "Settlement" means the process of transmitting sales

• Page 7, Line 13information to the issuing bank for collection and

• Page 7, Line 14reimbursement of funds to the merchant and calculating and

• Page 7, Line 15reporting the net transaction amount to the issuer and

• Page 7, Line 16merchant for an electronic payment transaction that is cleared.

• Page 7, Line 17(q)  "Tax" means any sales, use, occupation, or excise tax imposed by the state or a unit of local government in the state.

• Page 7, Line 18(4)  Prohibition on certain payment card network practices.A

• Page 7, Line 19payment card network, whether directly or through an agent,

• Page 7, Line 20acquirer bank, processor, contract, requirement, condition,

• Page 7, Line 21penalty, technological specification, or inducement, shall not:

• Page 8, Line 1(a)  Fix or conspire to fix an interchange fee with, or on

• Page 8, Line 2behalf of, a covered credit card issuer or another payment card network;

• Page 8, Line 3(b)  Establish, put forward, or implement a fee schedule

• Page 8, Line 4that the payment card network knows, or reasonably should

• Page 8, Line 5know, has been used by a covered credit card issuer other than

• Page 8, Line 6the payment card network to determine the amount of an

• Page 8, Line 7interchange fee charged or received by the covered credit card issuer in the current or previous calendar year;

• Page 8, Line 8(c)  Establish, charge, or put forward on a fee schedule an interchange fee if:

• Page 8, Line 9(I)  The fee is or includes a percentage multiplied by the

• Page 8, Line 10gross dollar amount of a transaction conducted with a debit card or credit card; and

• Page 8, Line 11(II)  the fee does not exclude from the gross dollar

• Page 8, Line 12amount of the transaction any amount attributable to a tax or gratuity on the transaction;

• Page 8, Line 13(d)  Increase the rate or amount of fees that apply to the

• Page 8, Line 14portion of a transaction other than the portion described in

• Page 8, Line 15subsection (4)(c)(II) of this section in an attempt to or in a

• Page 8, Line 16manner that would circumvent the prohibition set forth in subsection (4)(c) of this section;

• Page 8, Line 17(e)  Require a merchant that accepts credit cards that are

• Page 8, Line 18enabled for processing over the payment card network to

• Page 8, Line 19accept all credit cards issued by a covered credit card issuer that are enabled for processing over the payment card network;

• Page 8, Line 20(f)  Distribute, publish, or otherwise use data from an electronic payment transaction, except to:

• Page 9, Line 1(I)  Process the electronic payment transaction;

• (II)  Monitor for, detect, or prevent fraud;

• Page 9, Line 2(III)  Support loyalty, rewards, or promotional offers;

• Page 9, Line 3(IV)  Tailor products and services to serve customers' needs; and

• Page 9, Line 4(V)  Otherwise comply with state or federal law;

• Page 9, Line 5(g)  Charge a fee to a consumer or merchant related to a

• Page 9, Line 6disputed credit card transaction until the dispute has been

• Page 9, Line 7resolved by a determination that the consumer or merchant is

• Page 9, Line 8liable for the transaction and the consumer or merchant has been provided written notice of the determination; or

• Page 9, Line 9(h)  Impose a penalty on a merchant for setting prices in a manner that complies with state and federal law.

• Page 9, Line 10(5)  Limits on network fee-setting for charitable contributions.

• Page 9, Line 11A payment card network, whether directly or through an

• Page 9, Line 12agent, acquirer bank, processor, contract, requirement,

• Page 9, Line 13condition, penalty, technological specification, or inducement,

• Page 9, Line 14shall not establish, put forward, or implement a fee schedule

• Page 9, Line 15that the payment card network knows or reasonably should

• Page 9, Line 16know has been used by one or more issuers other than the

• Page 9, Line 17payment card network to determine the amount of an

• Page 9, Line 18interchange fee received or charged in respect to a charitable contribution, unless the interchange fee does not exceed:

• Page 9, Line 19(a)  Two-tenths of one percent of the amount of a charitable contribution made by means of a debit card; or

• Page 9, Line 20(b)  Three-tenths of one percent of the amount of a charitable contribution made by means of a credit card.

• Page 10, Line 1(6) Penalties. (a)  If a payment card network violates this

• Page 10, Line 2section, a merchant, consumer, or other individual or entity

• Page 10, Line 3that is injured as a result of the violation may bring a civil

• Page 10, Line 4action against the payment card network. Except in a certified

• Page 10, Line 5class action, and notwithstanding any other law, any payment

• Page 10, Line 6card network that, in a civil action, is found to have violated this section is liable in an amount equal to the sum of:

• Page 10, Line 7(I)  The greater of:

• Page 10, Line 8(A)  The amount of actual damages sustained, including

• Page 10, Line 9prejudgment interest of either eight percent per year or at the

• Page 10, Line 10rate provided in section 13-21-101, whichever is greater, from the date the claim accrued;

• Page 10, Line 11(B)  Five hundred dollars; or

• Page 10, Line 12(C)  Three times the amount of actual damages sustained,

• Page 10, Line 13if it is established by clear and convincing evidence that the payment card network engaged in bad faith conduct; plus

• Page 10, Line 14(II)  In the case of any successful action to enforce said

• Page 10, Line 15liability, the costs of the action together with reasonable attorney fees as determined by the court.

• Page 10, Line 16(b)  In a case certified as a class action, a successful

• Page 10, Line 17plaintiff may recover actual damages, injunctive relief allowed by law, and reasonable attorney fees and costs.

• Page 10, Line 18(c)  Any person who brings an action under this section

• Page 10, Line 19that is found by the court to be frivolous, groundless, and in

• Page 10, Line 20bad faith, or for the purpose of harassment, shall be liable to

• Page 10, Line 21the defendant for the costs of the action together with reasonable attorney fees as determined by the court.

• Page 11, Line 1(7)  Antitrust authority.Nothing in this section limits or

• Page 11, Line 2otherwise affects the attorney general's antitrust authority pursuant to article 4 of title 6.

• Page 11, Line 3(8)  Severability.If any provision of this section or the

• Page 11, Line 4application of this section to any person or circumstance is held

• Page 11, Line 5invalid, the invalidity does not affect other provisions or

• Page 11, Line 6applications of this section or this code that can be given effect

• Page 11, Line 7without the invalid provision or application, and to this end the provisions of this section are declared to be severable.

• Page 11, Line 8SECTION 2.  Act subject to petition - effective date. This act

• Page 11, Line 9takes effect November 7, 2025; except that, if a referendum petition is

• Page 11, Line 10filed pursuant to section 1 (3) of article V of the state constitution against

• Page 11, Line 11this act or an item, section, or part of this act within the ninety-day period

• Page 11, Line 12after final adjournment of the general assembly, then the act, item,

• Page 11, Line 13section, or part will not take effect unless approved by the people at the

• Page 11, Line 14general election to be held in November 2026 and, in such case, will take

• Page 11, Line 15effect on the date of the official declaration of the vote thereon by the governor.