Financial Institutions Push for Repeal of Illinois Interchange Fee Law
Financial institutions in Illinois are heavily lobbying for the repeal of the state's Interchange Fee Prohibition Act, scheduled to take effect on July 1, 2026. This first-of-its-kind law prohibits banks and credit card companies from charging interchange fees on the tax and tip portions of consumer bills. The Electronic Payments Coalition, representing banks and card issuers, warns that failing to repeal the law could cause 'credit card chaos,' claiming the global payment system cannot currently distinguish between subtotal, tax, and tips without costly retooling. They suggest merchants might stop accepting cards or alter transaction processes significantly. Conversely, the Illinois Retail Merchants Association argues these claims are fabrications, stating that payment processors already track necessary data and only minor coding changes are required for compliance. The dispute highlights a significant conflict between financial entities and retail merchants in Springfield, with both sides investing heavily in advertising and public relations to influence lawmakers before the implementation deadline.
Wire timeline
Financial Institutions Push for Repeal of Illinois Interchange Fee Law
Financial institutions in Illinois are heavily lobbying for the repeal of the state's Interchange Fee Prohibition Act, scheduled to take effect on July 1, 2026. This first-of-its-kind law prohibits banks and credit card companies from charging interchange fees on the tax and tip portions of consumer bills. The Electronic Payments Coalition, representing banks and card issuers, warns that failing to repeal the law could cause 'credit card chaos,' claiming the global payment system cannot currently distinguish between subtotal, tax, and tips without costly retooling. They suggest merchants might stop accepting cards or alter transaction processes significantly. Conversely, the Illinois Retail Merchants Association argues these claims are fabrications, stating that payment processors already track necessary data and only minor coding changes are required for compliance. The dispute highlights a significant conflict between financial entities and retail merchants in Springfield, with both sides investing heavily in advertising and public relations to influence lawmakers before the implementation deadline.
AP News