(The Center Square) – Banking groups are applauding the news that Illinois’ controversial Interchange Fee Prohibition Act is being placed on the back burner for a year.
The law would prohibit interchange fees from being charged on portions of credit and debit card transactions that include taxes and gratuities.
The law is currently being challenged in federal court, so the Illinois General Assembly has moved to delay its implementation until next year. Gov. J.B. Pritzker still has to sign off on the legislature’s action to extend the deadline for a year.
“We are pleased because this will give the court the opportunity to rule on the legality of the law which otherwise would go into effect,” said Jodie Kelley, CEO of the Electronic Transactions Association.
The Illinois Bankers Association and the Illinois Credit Union League were among a group of plaintiffs who filed litigation to challenge the law last August.
“This law will cause widespread economic disruption, and mounting evidence shows that the measure overwhelmingly benefits corporate megastores while placing an undue financial burden on small businesses and smaller financial institutions that form the backbone of our local economies,” said Ben Jackson, executive vice president of the Illinois Bankers Association.
Last October, the Office of the Comptroller of the Currency, which charters and examines national banks, filed an amicus brief stating that the Act “is an ill-conceived, highly unusual and largely unworkable state law,” and “it is likely that fraud risk would increase significantly, consumer services would be constrained, and public trust would decline.”
The Illinois Retail Merchants Association, which lobbied for passage of the law in 2024, said it remains committed to ensuring implementation of the law is not delayed further.
Kelley said the law is unworkable and is confident the courts will realize that.
“However, if the court determines that a small portion of the law is not preempted, we expect the Legislature to repeal what remains because it would uniquely disadvantage Illinois state banks and credit unions, a result clearly not intended by the General Assembly or the governor,” said Kelley.
