Colorado governor vetoes bill targeting restaurant card fees

A veto in Denver kept restaurant operators on the hook for interchange fees on the tax portion of card transactions, a cost that can squeeze payroll, hours and raises before it shows up anywhere else on the books. The National Restaurant Association said Colorado restaurants would have saved more than $34 million a year, including at least $3,500 for the average full-service restaurant.

Gov. Jared Polis vetoed SB 26-134 on June 3, saying the measure carried significant legal risk and was likely not fully implementable. His decision followed the same warning sign now hanging over Illinois, where a similar law has been stalled by federal court action.

The Colorado bill was introduced on March 4 and cleared the Senate 18-17 on May 22 before passing the House and reaching Polis. It was sponsored by Sen. William Lindstedt, Sen. Iman Jodeh, House Speaker Julie McCluskie and House Majority Leader Monica Duran. The proposal would have barred card networks from charging interchange fees on the tax portion of restaurant transactions, a change supporters framed as relief for an industry where swipe fees rank behind only food and labor as a major cost.

That ranking matters on the floor and in the back of house. When payment costs stay high, operators often look for savings in labor scheduling, training, wage increases and staffing levels, the parts of the business workers feel first. A gain of $3,500 at a single full-service restaurant will not solve every labor problem, but across a group of stores it can mean one more shift covered, a delayed cut to hours or a little more room for raises during a tight season.

The policy fight is not new. Illinois signed its Interchange Fee Prohibition Act in June 2024 and set it to take effect on July 1, 2025, before lawmakers delayed implementation. On June 1, 2026, a federal court issued a permanent injunction blocking enforcement of the fee prohibition against national banks, out-of-state state-chartered banks covered by the Riegle-Neal Act, federal savings associations and payment card networks. The Illinois law had barred interchange fees on the sales tax and tip portions of transactions, and the National Restaurant Association called it the first-of-its-kind state law on the issue.

Industry groups split sharply over Colorado. Restaurant and retail organizations backed the bill as margin relief, while the Electronic Payments Coalition said Polis made the prudent and responsible call. The coalition spent about $6 million in March and April on ads opposing the measure, underscoring how much is at stake in a fight that starts with card processing but reaches straight into restaurant labor budgets.