DENVER — A new bill could help businesses throughout Colorado save money by prohibiting credit card companies from implementing transaction fees on tips and sales tax.
This would come as relief to small businesses who are struggling financially and facing the challenges of food prices and minimum wage costs.
Rep. Max Brooks, R-Castle Rock, is one of the sponsors of House Bill 1282 and said it started at the community level as restaurant owners told him of the thousands of dollars they have to pay through swipe fees. Brooks also emphasized customers may not realize the hardship these fees are creating on small businesses.
"Now, the swipe fees are a convenience fee for using a credit card. A lot of people don't know this, though, while they understand that there is a transaction fee, there's also a transaction that comes from the merchants specifically for just the taxes and tips portion of the bill," Brooks said.
Since 2016, Coperta, a southern Italian Restaurant in Uptown, has served up pasta dishes and watched the neighborhood grow. Aileen Riley, co-owner of the restaurant, described the current challenges they face being a local spot in the constantly changing restaurant industry.
"I've been doing it for almost 25 years, and it's never been harder between food prices increasing beverage prices, increasing minimum wage costs, just things even like what's going on with eggs...but also too just people going out as much, you're seeing a downturn and people going out because of some of the increases that we've had to take on as well, so it is very difficult," Riley said.
Another costly challenge which the restaurant has been navigating is transaction fees as they have seen fewer people use cash when closing out their bill, instead relying on credit cards.
"Last year we paid $61,000 in swipe fees and just within perspective, for a restaurant our size, that is just about $5,000 less than we spent in buying beer, wine and liquor, so it's a huge number for us," explained Riley. "When you think that that's the items that we are actually selling and producing revenue off of, the fact that we're paying almost equal as much in swipe fees back to these larger companies it's a very big part of what we do."
If the new bill were to pass, Riley said they would save close to 10,000 from taxes and tips being excluded.
"This bill would make such an impact for us because not paying this percentage of money that we're directly pushing back out to the government again in our sales tax form and to our staff, that's a start, and right now, restaurants and many businesses just need any help they can get," Riley said.
Many restaurants continue to struggle following the pandemic as Sonia Riggs, CEO of the Colorado Restaurant Association, explained businesses are losing money.
"I used to hear from restaurants that their typical profit margin was 3 to 5%, now I'm hearing it's 1 to 2% if they're lucky, if they're making any money at all," Riggs said.
She explained many of these businesses are losing thousands of dollars to these transaction fees. Riggs said, "So in 2025, restaurants are telling us they're expecting to pay about $200,000 a year on average in swipe fees and about $50,000 of that is on fees directly contributed to sales tax and tips. So this bill would save restaurants a significant amount of money."
Stacy Johnson, the owner and operator of Salon Bodhi, explained while credit cards are convenient to use when paying bills, they also present a financial hardship with the business paying over $8,000 in transaction fees last year.
"It doesn't feel like we have much control over that, so it's just the price to pay to do business, which is unfortunate because everything seems to go to credit cards. People don't carry cash around very much either," Johnson said.
If this bill were to pass, Johnson is hopeful the money saved could instead be used towards other efforts.
"It would help free up like marketing efforts or classroom efforts, just ongoing education and just that type of money could be transferred into something that would help the business grow and not take a hit," Johnson said.
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