Swipe fee battle continues after delay, court ruling

By Jim Talamonti | The Center Square
The Center Square

(The Center Square) – Illinois is still waiting to benefit from a law promised to generate hundreds of millions of dollars by restricting credit and debit card swipe fees.

U.S. District Court Judge Virginia Kendall ruled that a federal order issued in April effectively blocks the Illinois Interchange Fee Prohibition Act that was signed into law in 2024.

Hours before the ruling, state lawmakers voted to delay implementation of the IFPA from July 1 of this year to July 1, 2027 by passing Senate Bill 3645.

Rob Karr, president and CEO of the Illinois Retail Merchants Association, said IRMA proposed the law that would generate $200 million annually and help the state address a budget shortfall.

“Let me repeat that: $200 million annually from retailers, and that number grows incrementally each and every year,” Karr told the Illinois House Executive Committee last weekend.

Karr called the IFPA “the largest small business relief package ever passed by the General Assembly.”

Despite Karr’s testimony, lawmakers voted to delay the law’s effective date for the second year in a row.

State Rep. John Cabello, R-Machesney Park, said the bill was never heard in any committee.

“That bill was negotiated, in my opinion, in a back room deal, dead of night at the governor’s mansion. If it’s that good of a bill, let’s hear it,” Cabello said.

In October 2024, the Office of the Comptroller of the Currency, which charters and examines national banks, filed an amicus brief stating that the IFPA “is an ill-conceived, highly unusual and largely unworkable state law.”

The American Bankers Association, Illinois Bankers Association, America’s Credit Unions and Illinois Credit Union League welcomed the ruling, saying the court concluded that the IFPA could not be applied to national banks, federal savings associations, payment networks and certain other financial service providers.

“The decision will spare millions of Illinois businesses and citizens from payment chaos,” the groups said in a statement.

On Sunday, Karr reminded lawmakers that banks and credit card processors previously opposed debit card swipe fees.

“Debit cards are used billions of times every year. Electronic payments continue to grow,” Karr said.

Karr said banks, credit card companies and processors are predicting chaos like they did 15 years ago.

“The payments industry remains enormously profitable, and consumers and retailers have benefited from the debit reforms that brought greater fairness and competition to the marketplace,” Karr said.

Merchants Payment Coalition executive committee member and National Association of Convenience Stores general counsel Doug Kantor said in a statement that he expects the IFPA to eventually be upheld.

In April, Kantor told The Center Square that the Trump administration could take action to change the rule imposed by the OCC.

Greg Bishop, Kevin Bessler and Sean Reed contributed to this story.