A last-minute budget move will see the implementation date for the Illinois Interchange Fee Prohibition Act pushed back a year, to July 1, 2027.

Originally scheduled to become law Monday, the IFPA would have seen interchange on sales tax and tips prohibited. How it would have been implemented has been a sticking point for both advocates and detractors.

The delay is expected to be signed by Governor JB Pritzker as part of the state’s 2027 budget. The IFPA was originally scheduled for implementation July 1, 2025, but was delayed for a year.

On the payments side, the delay is a sign the act is flawed. “This second delay reflects the reality that the law was flawed from the beginning,” Scott Talbott, executive vice president of the Electronic Transactions Association, tells Digital Transactions News via email. “With the OCC ruling that the IFPA is preempted for national banks, it should be repealed.” In April the Office of the Comptroller of the Currency filed a notice about a rule to preempt the IFPA, Digital Transactions News reported.

Other payments advocates also supported the extension.

“The Illinois General Assembly’s extension of the Interchange Fee Prohibition Act’s effective date is a win for consumers and credit unions,” says Scott Simpson, president and chief executive of trade association America’s Credit Unions. “However, ongoing litigation and the recent rules from the OCC and NCUA reinforce that more action is needed. Even with an extension, if the law takes effect, Illinois’s state-chartered credit unions and community banks will be at a disadvantage as federal institutions are preempted.”

The Electronic Payments Coalition also says it appreciated the delay. “At the same time, this latest delay is yet another acknowledgment that lawmakers rushed through a deeply flawed law without fully understanding the consequences. Unfortunately for Illinois consumers, small businesses, community banks, and credit unions, delaying the chaos is not the same as fixing it. The only real solution is full repeal,” Richard Hunt, EPC executive chairman, says in a statement.

Meanwhile, the Merchant Payments Coalition, which has advocated for the measure, says the delay was unfortunate. “The law ought to go into effect at this point,” Doug Kantor, an executive committee member of the MPC, tells Digital Transactions News.

“Understand that the banks are throwing around misinformation that people get nervous about,” Kantor says. “The only issue in Illinois is the credit card industry is dragging its feet and tried to throw obstacles at it. We look forward to the law eventually going into effect.”

The National Retail Federation also is disappointed with the delay. “We share in the disappointment,” says Dylan Jeon, vice president of NRF government relations. “We look forward to picking this back up next year.” In the meantime, the NRF’s focus will be on ongoing litigation, he says.