Swipe Fee Bill Will Do Far More Harm Than Good By Kevin Erickson, Chairman, CBA CHAIRMAN’S MESSAGE While presented as a solution, the bill fails to account for the full range of consequences it will leave in its wake. The use of the phrase “unintended consequences” when discussing proposed legislation has become almost cliché, and yet it remains an incredibly useful and accurate phrase to describe the effects of bills that may be unforeseen to proponents but which are no less real. HB25-1282 is the type of bill for which that phrase is meant for. A recent op-ed suggests that HB25-1282 — which, among other things, would place artificial limits on credit card interchange fees and eliminate them in specific transactions — would save small businesses money. Unfortunately, while it may be well-intentioned, the bill has several inherent flaws which, instead of saving consumers and small businesses money, will in fact cost them far more in the long run. Limiting credit card fees may sound good in theory, but in practice will cause significant harm to small businesses and consumers alike. It is important first to understand what interchange fees are and what they are for. Like any product or service, there are costs associated with providing credit cards and making purchases with them. Every time you make a payment with a credit card, there are costs associated with processing that transaction, protecting the information on the card, and providing consumer benefits, such as reward points. The fee that is charged with each use of the card — the interchange fee — goes towards covering those costs of the processing, fast transfer of funds to the merchant, stringent back-end security and cardholder benefits that make modern electronic payments and purchases convenient and safe. Accordingly, limiting or erasing those fees may Colorado Banker 4
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