COLORADO SPRINGS, Colo. (KOAA) — A new state bill (SB26-134) aimed to cut swipe fees is drawing mixed reactions from local business owners and banks.
Every time a customer uses a credit card, the business must pay a swipe fee, also called an interchange fee. Those fees typically range from 2% to 3% of the total transaction.
Some business owners say those costs are adding up and making it harder to stay afloat.
At Voodoo Brewing Co. in Colorado Springs, owner Micah Maffeo says the financial pressure on small businesses has been growing.
“Spending is down, cost of goods is going up, cost of labor is going up,” said Maffeo.
Maffeo told News5 that swipe fees have become an additional burden when running his brewery. Last year alone, he says he paid nearly $4,000 in swipe fees on sales taxes collected from customers.
“We don't see a cent of it, but then we also have to pay fees on that," said Maffeo.
The proposed bill would prevent credit card networks from charging swipe fees on the sales tax portion of a transaction.
Supporters say that change could give small businesses some financial relief. However, some banks warn that the proposal could create unintended consequences.
Brett Wyss, CEO of Integrity Bank and Trust, says interchange fees help support the systems customers rely on when using credit cards.
“I think there’s a lack of understanding of what interchange fees accomplish for people,” said Wyss.
Wyss says those fees help fund fraud protection, security updates, and the infrastructure needed to process card transactions.
"Banks have to spend money in order to have rails to move money and keep money safer,” said Wyss.
He also argues the bill could complicate the payment process.
“What the bill would not allow is to charge interchange on the whole thing. You would have two transactions, the cost of goods and the tax piece,” said Wyss.
For Maffeo, however, the change could provide some relief during a difficult time for small businesses.
“And we are not profiting at all,” he said. “It is literally just pressure to alleviate so we could survive a little bit longer.”
- Watch News5's coverage on some other bills being discussed this legislative session below:
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