Colorado Gov. Jared Polis has vetoed legislation that credit union advocates warned would have created significant disruptions across the state's payment ecosystem, earning praise from national and state credit union organizations that spent months opposing the measure.
Senate Bill 26-134, dubbed the "Credit Card Chaos" bill by opponents, would have prohibited interchange fees on the tax portion of card transactions and required extensive changes to how payment card transactions are processed, settled and reconciled.
The GoWest Credit Union Association, America's Credit Unions and the Defense Credit Union Council (DCUC) all applauded the veto, arguing the legislation would have imposed new costs and operational burdens on credit unions, merchants and consumers without guaranteeing lower prices at the checkout counter.
"This veto protects Colorado consumers from unnecessary disruption and preserves a secure, efficient payments system," said Troy Stang, president/CEO of GoWest Credit Union Association. "As financial partners to more than 2.8 million Coloradans, credit unions support policies that lower costs and improve financial access for families and small businesses."
The legislation mirrored efforts underway in several states to exempt sales taxes from interchange fee calculations. Credit unions have argued that such proposals are not simple pricing adjustments but would require sweeping modifications to payment networks, merchant systems, dispute-resolution processes and fraud-prevention operations.
"A prohibition on interchange fees shifts the payments system away from consumers and toward retail giants who stand to reap the benefits," said America's Credit Unions President/CEO Scott Simpson. He added that ongoing litigation and federal preemption disputes surrounding similar laws, particularly in Illinois, could have left Colorado facing years of legal uncertainty.
DCUC officials also highlighted concerns about military families and veterans who rely on community-based credit unions. In a letter urging a veto, Chief Advocacy Officer Jason Stverak warned that reducing resources available for fraud prevention, member service and affordable financial products could disproportionately affect military households.
"Governor Polis' veto reflects a clear understanding of the complexity and interconnected nature of the payments system," said DCUC President/CEO Anthony Hernandez.
Credit union advocates said the veto represents a major victory in a broader national fight over interchange regulation, with similar proposals continuing to emerge in states including Illinois, New York, Pennsylvania and Massachusetts. They pledged to continue working with policymakers on solutions that improve affordability without disrupting the national payments system.
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