DENVER—Credit unions joined with banks here in testifying before the Colorado legislation against a proposed bill that would have limited credit card transaction fees on businesses in the state.
The bill, proposed by Jon Becker (R-Fort Morgan) and Alec Garnett (D-Denver) proposed making Colorado the first state in the U.S. to
prohibit financial institutions from charging transaction fees on the portion of electronic payment transactions that cover local taxes.
The Denver Business Journal reported, however, that opposition from the state’s banks and credit unions helped to quash the bill, which was then altered to require a study of the potential change in the law.
But the idea of conducting a study was also firmly opposed by financial institutions, which argued that proponents of the legislation did not seem interested in recognizing that transaction fees are used to cover the fraud-protection services they offer.
When the Colorado Department of Regulatory Affairs said it could neither compel banks to hand over the data requested in the study nor have any shot at completing it by Oct. 15, as the bill contemplated, the House Finance Committee killed House Bill 1154 by a 9-2 margin, according to the Denver Business Journal.
Small business owners in Colorado have argued against paying fees to financial institutions, saying they are being charged for funds they do not get to keep. The business owners testified that if fees, which range from 21 cents per transaction to 3% of all customer spending, were lower they could, in turn, lower prices.
Financial institutions countered by saying the business owners expect to receive a service for free, and that there are costs involved in guarding against breaches, and then when breaches and fraud occur.
Among those testifying was Scott Earl, president of the Mountain West CU Association.
"It appears almost to be a direct attack to credit unions' statement and missions," said Earl in comments quoted by the Denver Business Journal. "The study is shamelessly biased toward the merchants."