By Jim Talamonti | The Center Square
The Center Square

(The Center Square) – A retail business advocate says a federal judge’s ruling to uphold the Interchange Fee Prohibition Act paves the way for Main Street Illinois to experience major relief, but a banking advocate says the law could slow commerce and foul up transactions.

U.S. District Court Judge Virginia Kendall ruled on Tuesday that the law to ban processing fees on the tax and tip portion of credit and debit card transactions could be implemented as scheduled July 1.

Illinois Retail Merchants Association President and CEO Rob Karr said removing the pressure of swipe fees on prices will be a big deal.

“This is probably the largest single relief package for Main Street retail in Illinois,” Karr told The Center Square.

Ben Jackson, executive vice president of the Illinois Bankers Association, said the law is an anomaly in terms of how it treats payments.

“It’s going to slow down the speed of commerce, foul up transactions. There’s still a lot of unknowns here in terms of how online transactions are handled,” Jackson told TCS.

Jackson said plaintiffs, including the Illinois Credit Union League and the American Bankers Association, would ask the Seventh Circuit Court of Appeals for an expedited case.

“The effective date of this law is coming up very quickly, in just a few months time. Certainly, no one is ready for this,” Jackson said.

Although other state legislatures have introduced legislation similar to the Interchange Fee Prohibition Act, Jackson said Illinois remains the only state to have passed legislation prohibiting swipe fees on taxes and tips.

Jackson said the plaintiffs remained very confident in their case.

Illinois U.S. Sen. Dick Durbin, D-Springfield, filed amicus briefs in support of the law in 2024 and 2025.

Electronic Payments Coalition Executive Chairman Richard Hunt said the law’s provisions remain a threat to the payment processing system that protects consumers and businesses and a burden to small businesses and consumers.

“This reckless policy, which will make Illinois an outlier in the interconnected global payments system, must be fully and swiftly repealed by the Illinois General Assembly before it inflicts credit card chaos on small businesses and consumers across the state,” Hunt said in a statement.

Karr disputed suggestions that the new law could cause chaos.

“They stopped making those arguments with the legislature because they were found to be so uncredible. Furthermore, their own experts in the court case did not use those arguments, because they know they’re not credible,” Karr said.

Karr said credit card companies and processors have had two years to prepare for a smooth implementation of the new law on July 1.

“This is simple math. This should not be difficult,” Karr said.

Greg Bishop and Kevin Bessler contributed to this story.

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