Legislative Update with Kenley

​Updates on payments policy, Summit reminders, and key advocacy issues impacting Dakota credit unions.

By Kenley Lamberty, DakCU Director of Political Strategy and Engagement
 
Why Interchange Fee Bills Miss the Mark and Why Consumers Ultimately Pay the Price
Legislation targeting “interchange” or “swipe” fees is once again moving through a state legislature, this time in Colorado. Senate Bill 26‑134 would restrict how transaction fees are calculated by prohibiting inclusion of sales tax in percentage‑based card fees. While proponents frame the bill as relief for small businesses, history and experience suggest these policies are more likely to harm consumers, undermine payment security, and disproportionately benefit large retailers.
 
This debate is not new. A similar policy was enacted in Illinois, and Colorado lawmakers are now considering following suit with one notable difference. The Colorado proposal applies only to financial institutions with more than $60 billion in assets, creating an uneven and confusing payments environment and raising serious concerns about consumer impacts.
 
What Interchange Really Pays For
Interchange fees are often oversimplified as a “cost” imposed on merchants. In reality, these fees fund the infrastructure that makes modern electronic payments safe, reliable, and convenient for both consumers and businesses.
 
Interchange revenue is used to:

• Prevent, detect, and absorb card fraud
• Invest in data security and payment technology
• Provide consumer protections, including zero‑liability fraud coverage
• Guarantee merchants receive payment even if a transaction later proves fraudulent

 
This last point is often overlooked. When a card transaction turns out to be fraudulent, the financial institution, not the retailer, absorbs the loss. That guarantee is a huge benefit to merchants, ensuring they are paid quickly and with certainty.
 
Without interchange revenue supporting those systems, consumers could face fewer card benefits, reduced fraud protection, and higher out‑of‑pocket costs while merchants would be exposed to greater risk.
 
Who Really Benefits?
Supporters of SB 134 point to restaurants and small retailers who claim the bill would save tens of thousands of dollars annually. But opponents, including credit unions, banks, chambers of commerce, and labor organizations, have warned that the largest beneficiaries would be big‑box retailers such as Walmart, Target, and Home Depot.
 
Even amendments requiring large retailers to pass savings on to consumers or employees offer little accountability. Similar promises made after earlier interchange regulations never materialized at scale. There is no meaningful enforcement mechanism to ensure consumers will ever see lower prices at the register.
 
Interchange fee legislation like Colorado’s may be well‑intended, but it is fundamentally flawed. By undermining the system that pays for fraud protection, payment guarantees, and security investments, these bills threaten consumers, weaken trust in electronic payments, and reward the largest retailers at the expense of everyday people.
 
Credit unions support small businesses, fair competition, and consumer protection but policies that weaken payment security and shift costs onto consumers are not the answer. Lawmakers should focus on solutions that strengthen, not destabilize, the financial ecosystem that consumers and businesses rely on every day.
 
Summit Auction Items Still Needed!
As a reminder, our silent auction will once again be a highlight of this year’s Dakota Credit Union Association Annual Summit, May 12–14, and a meaningful way to give back.  We’re still looking for great auction items, so if you have something special you’d like to donate, please let me know soon so we can prepare the listings in advance. Every contribution, big or small, helps make this fundraiser a success. Please bring donated items to the Annual Summit registration table no later than 8:00 am on Wednesday, May 13.

Attendees can now preregister to bid and preview auction items that have already been donated, giving everyone a chance to start planning their bids before the event begins.

Preregister and preview items here. 

Proceeds directly support the Roger Heacock Scholarship, which provides opportunities for credit union professionals from the Dakotas to attend national advocacy events in Washington, D.C. It’s a powerful way to strengthen our industry’s voice and ensure our movement is well represented on Capitol Hill.
 
Early Voting Is Open Now — Make a Plan to Vote
Voter Registration Deadline: May 18
The Dakota Credit Union Association is encouraging credit union leaders, employees, and advocates to take part in South Dakota’s June 2 primary election by voting early or on Election Day—and to make sure they are registered before the deadline.

Under state law, voters must be registered no later than May 18 to participate in the primary election. South Dakota does not offer online voter registration, so eligible voters must complete, sign, and submit a registration form to their county auditor by the deadline.

Participation in the primary election is an important way for the credit union movement to make its voice heard. Decisions made by elected officials directly impact credit unions, including regulation, taxation, and support for community-focused financial institutions. Strong civic engagement helps ensure policymakers understand the value of the cooperative, not-for-profit credit union model.

Early voting is open now, making it easier than ever to participate. We encourage all members to check their registration status, make a voting plan, and cast their ballot.

Official voter registration information and forms are available through the South Dakota Secretary of State’s Office at www.sdsos.gov. 
 
Stay Connected
For more information or to share your perspectives, feel free to contact me. ​​