Dive Brief:
- Illinois lawmakers voted to delay until 2027 a state law banning interchange fees on the tax and tip portion of bills, the second one-year delay for a statute mired in litigation. The implementation votes Sunday and early Monday came as the General Assembly wrapped its legislative session, with the measure awaiting Gov. JB Pritzker’s signature.
- Separately, in comments filed Friday with the Office of the Comptroller of the Currency – which is seeking to preempt the law with a rule change – 12 consumer groups blasted the OCC’s move. “It is hard to overstate the hard pivot the OCC is undertaking in the name of protecting the profitability of banks and payment networks,” the groups wrote in their comment letter. “Now, fee-fixing is explicitly allowed, so long as it is done via third parties. The OCC’s admonitions about competition are no longer even lip service.”
- The Merchant Payments Coalition urged the federal agency to drop its rule. “The OCC’s interim final rule and order directly contradict President Trump’s call to end the “swipe fee rip-off” by preserving and endorsing a system in which card networks set the card fees that banks charge merchants,” the group said in its Friday letter.
Dive Insight:
The Interchange Fee Prohibition Act, passed in 2024, was scheduled to take effect July 1, 2025 before lawmakers delayed it by a year in the face of court challenges. The second 12-month delay comes now as regulators at the OCC and the National Credit Union Administration are seeking to preempt the law at the federal level.
The OCC rule change aims “to clarify” that national banks have the power to assess and collect interchange fees from credit and debit cards “even when such charges and fees are set by or in consultation with third parties” such as card networks.
In a March 30 letter filed with the OCC rule docket, the American Bankers Association said the Illinois law “threatens to fragment the payments system, undermine operational stability, and disrupt consumers and businesses far beyond Illinois.”
Illinois was the first state to enact such a law, which inspired similar efforts in other states, where legislators have sought to rein in card-swipe fees. Restaurant and retail groups have promoted the Illinois law as their members seek to curb the fees they pay when a consumer uses a card.
An estimated 1.3 million Illinois merchants are affected by the law, plus thousands of additional e-commerce retailers, according to the ABA.
Four trade associations – the Illinois Bankers Association, the American Bankers Association, America’s Credit Unions and Illinois Credit Union League – sued Illinois in August 2024 over the Interchange Fee Prohibition Act, two months after Pritzker signed it. The litigation is in U.S. District Court in Chicago for proceedings on how the OCC’s preemption affects the law.
The legislature’s one-year delay “will protect Illinois businesses and consumers from facing payment chaos in just a month, without interrupting our ongoing legal challenge to IFPA,” the plaintiff groups said Monday in a joint statement. “We remain confident in the strength of our case and look forward to securing permanent relief from this misguided law.”
The law’s second extension “allows time for the district court to reconsider its opinion in light of the OCC determination that the IFPA is pre-empted by federal law,” Scott Talbott, an executive for the Electronic Transactions Association, said Monday in an email.
The dozen consumer groups that wrote to the OCC included the National Association of Consumer Advocates, the National Community Reinvestment Coalition and Americans for Financial Reform Education.
