Legislation to ban interchange fees hits barriers in two states
Colorado’s governor vetoed one bill. And similar legislation in Illinois faces a permanent injunction.
June 4, 2026
Colorado’s Gov. Jared Polis on Wednesday vetoed legislation that would have banned credit card networks from imposing interchange fees on the tax portion of transactions.
The move is a setback for the restaurant industry, which has long called for reform of swipe fee regulations. Industry advocates say swipe fees are the third highest cost, behind food and labor, for many restaurants.
In Colorado, the interchange fee ban would have saved the average full-service restaurant at least $3,500 in card processing fees per year, which is meaningful relief, according to the National Restaurant Association. Overall, the bill would have saved Colorado restaurants and their customers more than $34 million in fees on an annual basis.
That impact would have been real for operators struggling with tight margins, argued Mike Whatley, the National Restaurant Association’s vice president of state affairs and grassroots advocacy.
“Restaurant owners are disappointed that Gov. Polis chose to veto this legislation, which was carefully targeted at the credit card interchange fees restaurant owners pay on the sales and use taxes they collect for the state,” said Whatley, in a statement. “Those fees, which add up to thousands of dollars annually, make it even more difficult for restaurant owners to eke out a profit. This bill—and others like it across the country—would provide real cost relief for business owners, and that’s good for restaurant operators, employees and customers.”
Earlier this week, the Illinois legislature passed a bill to pause for one year implementation of an Interchange Fee Prohibition Act there, which has been mired in litigation.
Illinois in 2024 was the first state to pass a ban on interchange fees. That bill was designed to give both businesses and consumers a bit of relief from swipe fees.
But a U.S. District Court judge issued a permanent injunction for Illinois’ law, citing an order by the federal Office of the Comptroller of the Currency, which essentially invalidated such bans at the state level.
Polis, in his veto letter, said he has been open to the core concept in the bill in Colorado and the problem it is trying to solve.
But, citing the delay in Illinois, he said it was likely the Colorado version of the bill would never have gone into effect.
“Colorado restaurants are the best in the world—and I want to do everything I can to support them during challenging times,” he wrote. “Additionally, the credit card industry is ripe for disruption, and there is far too much friction in our transaction ecosystem.”
The governor said the issue needs to be addressed at the national level. Creating a “Colorado-specific carve-out to the national and global integrated payments system” could create chaos, like asking consumers to swipe twice for one transaction, or requiring businesses to update their payment systems, he argued.
He also objected to an amendment that would have required retail businesses with more than 500 statewide employees to apply savings from the bill in specific ways.
“I do not believe it is appropriate for the government to direct private entities—no matter their size—how to use their revenues,” he wrote.
“Ultimately, the bill presents too much legal risk to Colorado’s business environment and consumers, with limited upside for our small business, for me to be comfortable signing,” wrote Polis.
Credit card trade groups and the banking industry, meanwhile, praised Polis’ veto, saying the legislation in Colorado would have imposed “unworkable mandates” and forced credit and debit card companies to operate differently there.
“Governor Polis made the prudent and responsible decision for Colorado,” said Richard Hunt, executive chairman of the Electronic Payments Coalition, a lobbying group representing credit unions, community banks and payment card networks. “This bill would have created chaos for merchants and consumers alike, threatened popular credit card rewards programs millions of Coloradans rely on, and placed community banks and credit unions in an impossible position. The Governor recognized that protecting consumers, small businesses, union jobs and Colorado’s economy—especially in communities dependent on tourism—had to come first.”
About the Author
Lisa Jennings
Executive Editor, Restaurant Business
Lisa Jennings is a veteran restaurant industry reporter and editor who covers the fast-casual sector, independent restaurants and emerging chain concepts. Her experience includes other industry publications as well as the daily newspaper The Commercial Appeal in Memphis, Tenn., where she was Food Editor. Her work has been cited in the Los Angeles Times, Business Insider, FoodBeast, The Huffington Post, Time.com and more.
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