What the Veto Means for Travelers Booking Hotels in Colorado
If you’ve ever redeemed credit card points for a hotel stay in Aspen, Denver, or Telluride, Wednesday night’s news out of the Colorado governor’s office was directly relevant to your next trip. Governor Jared Polis vetoed Senate Bill 26-134, known formally as the “Payment Card Networks’ Fees” bill, halting legislation that would have prohibited interchange fees from being applied to the tax portion of a credit card transaction. For travelers who rely on points-earning credit cards to offset the cost of hotel rooms, that’s a significant development - and not a minor procedural footnote.
The bill’s defeat preserves Colorado’s current electronic payments landscape, at least for now. Hotels, restaurants, and shops across the state can continue processing credit card payments as they do today, without being forced into workarounds that would have complicated checkout for both staff and guests. The practical ripple effects for anyone planning a Colorado hotel stay - budgeting carefully, stacking points, and watching interchange-funded rewards accumulate - are real.
How Interchange Fees Fund the Points Sitting in Your Account
Credit card processing fees for merchants across the country average just over 2%. That figure might seem like a quiet backstage number, but it funds the entire architecture of rewards programs that millions of hotel guests depend on. Issuing banks and networks like Visa and Mastercard use those fees to cover fraud protection, lending costs, and - most visibly to frequent travelers - the rewards programs attached to co-branded hotel cards and general travel cards alike.
When a guest charges a $400-per-night room at a Colorado ski resort to a points-earning card, the hotel pays a processing fee, and a portion of that fee eventually funds the miles or points credited back to the cardholder. That loop is what Senate Bill 26-134 threatened to interrupt. By removing interchange fees from the tax portion of a transaction, the bill would have forced consumers to potentially use multiple payment methods for a single purchase - paying the base rate one way and the tax another.
That’s not an abstract inconvenience at a hotel front desk. Front desk agents handling late checkouts, incidental holds, and split billing already navigate enough complexity. Adding a mandatory payment bifurcation at the point of sale would have created friction at exactly the moment guests want transactions to be fast and clean.
Governor Polis addressed this directly in his veto letter, writing that “the bill presents too much legal risk to Colorado’s business environment and consumers, with limited upside for our small businesses, for me to be comfortable signing.” He also cited risks to available consumer financing - another factor that affects how travelers fund large hotel stays and travel bookings.
Illinois as a Warning Sign
Colorado’s decision didn’t happen in a vacuum. Governor Polis’s veto letter specifically referenced the instability unfolding in Illinois, the only state to have passed comparable legislation so far. Illinois’s “Interchange Fee Prohibition Act” - which would have exempted both the tax and tip portions of a transaction from interchange - was originally set to take effect July 1, 2026.
This week, the Illinois legislature voted to push implementation back to 2027. Then, within hours of that vote, a federal judge issued a permanent injunction blocking the law entirely.
Polis cited this directly: “The ongoing legal and legislative developments of IFPA create unstable grounds for passage and implementation of SB 26-134 in Colorado.” Hotels operating in Illinois have been watching that timeline shift repeatedly, unable to confidently plan their payment infrastructure around a law that may never actually land.
Colorado’s hospitality sector - which draws millions of visitors annually to ski towns, national parks, and urban hotel districts - now avoids that same uncertainty. A hotel group managing properties in Denver and Breckenridge doesn’t have to rework its payment systems or advise front desk staff on split-payment procedures, at least not yet.
The Bigger Picture for Hotel Stays Across the Country
The Credit Card Competition Act, the most prominent federal-level attempt to overhaul interchange, has stalled. But states have stepped into that space aggressively, and Colorado was one front in what has become a multi-state legislative effort. The veto doesn’t end that effort - it simply removes Colorado from the active list, for now.
For travelers, the stakes are straightforward. Rewards programs - including the co-branded cards tied to major hotel chains - are funded in meaningful part by interchange revenue. Any legislation that restructures that revenue flow puts those programs under pressure. That pressure typically doesn’t appear as a dramatic cancellation; it shows up as reduced earn rates, devalued redemptions, or quietly raised thresholds for free nights.
A traveler who books 10 hotel nights a year on a rewards card and earns enough points for one free night annually is benefiting directly from the system Senate Bill 26-134 would have altered. The math isn’t complicated: less interchange revenue flowing to issuers means less money available to fund that free night.
What Colorado Hotel Guests Should Know Right Now
The veto protects the status quo, but the status quo is still worth understanding. Colorado remains a destination where credit card rewards can meaningfully reduce the cost of a trip. Hotel rates in Denver’s LoDo neighborhood, mountain resort towns like Steamboat Springs, or gateway towns near Rocky Mountain National Park can run from $150 to well over $500 per night depending on season and property tier. Points redemptions that offset even two or three nights represent real savings.
The state also continues to see significant hotel development and tourism investment. Visitors arriving with a well-stocked points balance and a co-branded hotel card can still earn, spend, and redeem without navigating any new payment rules at the front desk.
Other states and the federal government are still actively considering changes to the interchange system. Legislation similar to Senate Bill 26-134 remains under review at multiple levels, which means the rewards landscape could still shift - just not in Colorado, and not this year.
For now, the traveler checking into a Colorado hotel this summer can pay with a single card, earn their points on the full transaction including taxes, and leave without having handed over two separate payment methods to cover the bill. Whether that simplicity holds through 2026 depends on decisions being made in statehouses and courtrooms far from any mountain check-in desk.
The question worth watching: if Illinois’s permanent injunction holds and the federal Credit Card Competition Act continues to stall, does the state-level push lose momentum - or does it find a state with friendlier political conditions and try again? A hotel stay booked with points in 2027 might look very different depending on that answer.
A free night certificate on a co-branded hotel card currently requires, on average, $15,000 in annual spend to earn. That number is worth keeping in mind.
