Polis vetoes – Colorado Gov. Jared Polis vetoed Senate Bill 26-134, blocking changes that would have barred interchange fees on the tax portion of credit card transactions—moves that supporters said could reshape how payments work, and opponents argued could disrupt rewards
On Wednesday night, Colorado Gov. Jared Polis pulled the plug on Senate Bill 26-134, stopping a proposal that aimed to change how credit card interchange fees are handled when people pay taxes.
The bill—titled “Payment Card Networks’ Fees”—would have prohibited interchange fees from being imposed on the tax portion of a credit card transaction. The practical result supporters feared would be avoided was simple but disruptive: consumers could be pushed to use multiple payment methods for a single purchase.
Polis said the measure carried too much risk for the state’s business climate. In a letter explaining his decision. he wrote that the bill “presents too much legal risk to Colorado’s business environment and consumers. ” with “limited upside for our small businesses.” He said he could not “be comfortable signing.”.
His veto lands amid a wider standoff in the U.S. where similar efforts at the federal level—most notably the Credit Card Competition Act—have stalled. And as those national negotiations have slowed, states have increasingly become the battleground for these proposed changes.
Polis’s own letter pointed to the uncertainty in that state-by-state approach, calling out Illinois as the only state where such a bill has been passed so far.
Illinois’ “Interchange Fee Prohibition Act” (IFPA) was passed two years ago and was originally set to take effect July 1, 2026. Under that law, both the tax and tip portions of a transaction would have been exempted from interchange. But the timeline has been anything but steady. Earlier this week, the Illinois legislature voted to delay implementation until 2027. Then, just hours later, a federal judge issued a permanent injunction on the law.
Polis said those legal and legislative developments in Illinois create “unstable grounds” for Senate Bill 26-134 to be carried forward in Colorado, as he laid out his concerns in his letter.
Nationwide, credit card processing fees for merchants average just over 2%. The system is built around payments that are shared across issuing banks and credit card networks like Visa and Mastercard—networks that use those fees to fight fraud. cover lending costs. and fund rewards. Polis cited that rewards funding as a reason for concern. warning that efforts to overhaul the system could put credit card rewards programs at risk and could even reduce the amount of financing available to Americans.
After the veto. the bill’s defeat was also framed as a protection for travelers and day-to-day shoppers who rely on points. TPG founder Brian Kelly applauded the decision. saying “Millions of Americans rely on credit card rewards for travel or to support their household’s bottom lines.” He added that the bill “would’ve injected significant confusion into what is currently a seamless payment process in the state. ” and said vetoing it sent a message to “constituents and tourists” that Colorado “values points as much as we do here at TPG.”.
With Senate Bill 26-134 now blocked from taking effect, other attempts to reshape electronic payments remain in play in both statehouses and federal arenas. For now, Colorado’s payment rules stay intact—while the legal fights elsewhere continue to show how quickly these changes can unravel.
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