Monday, March 15, 2026
Members of the Colorado Senate,
I write to respectfully urge you to oppose SB 26-134, legislation that would prohibit interchange fees from being applied to the sales-tax portion of electronic payment transactions in Colorado.
I share this perspective both in my role with National Taxpayers Union and as a small business owner who sees firsthand how important reliable, simple payment systems are for everyday commerce.
Although supporters frame SB 26-134 as relief for merchants, this bill would introduce a new government mandate into private payment networks that risks creating unnecessary complexity for businesses and consumers alike. Payment systems are designed to process transactions as a single secure exchange. Forcing the separation of the sales-tax portion could disrupt that process and create new operational burdens.
While SB 26-134 is presented as relief for merchants, the bill would impose a new government mandate on private payment networks and inject unnecessary regulation into a system that currently works well. Conservatives have long supported policies that allow markets to function freely without government dictating how private payment systems must operate.
This legislation would also impose real costs on small businesses. Today’s payment processing systems are designed to handle transactions as a single, secure exchange. Forcing processors and point-of-sale systems to separate out the sales-tax portion would require software upgrades and compliance changes that many small businesses are not currently equipped to handle. Large national retailers may be able to absorb those costs, but local shops and family-owned businesses will be left paying for system updates, vendor changes, and operational disruptions.
Small businesses also rely on credit card rewards programs in ways that are often overlooked in this debate. Many local business owners use business credit cards to purchase inventory, supplies, and equipment. Rewards programs help offset those expenses and improve cash flow for small operations with tight margins. Policies that restrict interchange revenue risk weakening or eliminating these programs, removing a valuable tool that small businesses use to manage costs and reinvest in their operations.
SB 26-134 also risks weakening community financial institutions by reducing interchange revenue that helps fund fraud protection, cybersecurity investments, and affordable banking services for consumers. At a time when fraud threats are rising, policymakers should be cautious about disrupting the revenue streams that support secure payment infrastructure.
Ultimately, this bill represents government interference in private payment markets that risks increasing costs for small businesses, reducing consumer benefits, and strengthening the position of the largest national retailers at the expense of local businesses.
For these reasons, I respectfully encourage you to vote NO on SB 26-134.
Thank you for your time and your service to the people of Colorado.
Sincerely,
Jess Ward
National Taxpayers Union