Illinois Lawmakers Vote to Delay Implementation of Interchange Fees Law

The Illinois state legislature voted Sunday (June 1) to delay the implementation of a law that would bar companies from charging interchange fees on the tax and tip portions of credit and debit card transactions.

The law, the Interchange Fee Prohibition Act (IFPA), was set to go into effect on July 1, but the vote delayed it for a year, until July 1, 2026, according to the Illinois General Assembly’s website.

The legislature’s move was also announced by trade associations on both sides of the issue.

The American Bankers Association, one of the groups that filed a lawsuit challenging the law in August, said in a Sunday article that the Illinois governor has 60 days to act on the measure after it is sent to him by the legislature.

Illinois Bankers Association Executive Vice President Ben Jackson thanked lawmakers for delaying the implementation of the law while also asking them to fully repeal it, according to the article.

The Illinois Retail Merchants Association, which favors the law, also reported on the legislature’s vote in a Sunday press release, saying that it is “disappointed” with the delay and that it will work to see that the law is not further delayed.

The IFPA was signed into law on June 7, 2024.

It was then challenged by a lawsuit filed by the Illinois Bankers Association, American Bankers Association, America’s Credit Unions and Illinois Credit Union League.

The lawsuit claimed that the IFPA is preempted by federal law, including the 2010 Durbin Amendment. The co-plaintiffs also argued that if the state law takes effect, it will throw the payment system into “chaos,” undermine the benefits provided by credit and debit cards, and violate several federal statutes.

U.S. Sen. Dick Durbin, author of the Durbin Amendment, filed an amicus brief in support of the IFPA in October, challenging the lawsuit’s claim that the IFPA is preempted by federal law.

Durbin said at the time in a press release that the IFPA is consistent with the intent of the Durbin Amendment, which sought to reduce “excessive debit interchange fees” and “created a ceiling — not a uniform standard — for debit interchange fees.”