{"id":901,"date":"2026-02-11T11:22:02","date_gmt":"2026-02-11T17:22:02","guid":{"rendered":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/?p=901"},"modified":"2026-02-11T11:22:02","modified_gmt":"2026-02-11T17:22:02","slug":"illinois-merchants-score-a-big-win-in-their-battle-for-interchange-relief","status":"publish","type":"post","link":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/?p=901","title":{"rendered":"Illinois Merchants Score a Big Win in Their Battle for Interchange Relief"},"content":{"rendered":"

<\/i>Peter Lucas<\/a><\/span>\u00a0<\/i>February 11, 2026<\/span>\u00a0<\/i>Acquiring<\/a>,\u00a0Competitive Strategies<\/a>,\u00a0Credit Cards<\/a>,\u00a0Debit Cards<\/a>,\u00a0Issuing\/Originating<\/a>,\u00a0Law and Regulation<\/a>,\u00a0Mobile Commerce<\/a>,\u00a0Point-of-sale<\/a>,\u00a0Pricing<\/a>,\u00a0Transaction Processing<\/a><\/span><\/p>\n

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Illinois merchants scored a big victory late Tuesday in their battle for interchange relief as United States District Court Judge Virginia Kendall upheld the Illinois Interchange Fee Prohibition Act.<\/p>\n

The decision, which comes after more than a year of legal wrangling, means the IFPA will go into effect July 1, a year later than originally intended. Since the measure\u2019s passage in 2024, banking organizations have sought a permanent injunction against it. Prior to her final ruling, Kendall had issued a\u00a0preliminary injunction<\/a><\/strong> against the IFPA in December 2024.<\/p>\n

The\u00a0law\u00a0exempts Illinois merchants from paying interchange on sales tax and gratuities linked to credit and debit card transactions. In exchange, the state will cap what merchants earn for collecting sales tax at $1,000 per month.<\/p>\n

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Kendall\u2019s ruling shot down plaintiffs\u2019 arguments that federal banking laws, such as the National Banking Act, supersede state laws regarding banks\u2019 ability to levy fees, such as card interchange. Kendall\u2019s ruling stated that, while the IFPA is \u201cnovel\u201d and \u201cno other state has an equivalent to the IFPA,\u201d all parties agree that issuers and acquirers do not set interchange, so the IFPA \u201cdoes not directly regulate banks.\u201d Kendall surmised that it is \u201cthe payment card networks, and not the banks, doing the actual work of [interchange] fee setting and charging\u201d and that banks \u201conly have a passive role in the rate-setting.\u201d<\/p>\n

As part of her preliminary injunction, Kendall\u00a0ruled<\/a><\/strong>\u00a0that, while financial institutions chartered outside Illinois that do business in the state do not have to comply with IFPA, Illinois-chartered financial institutions, credit unions, federally chartered credit unions, and the card networks must comply with the law.<\/p>\n

\u201c\u2026this court found that the IFPA\u2019s interchange fee provision was not preempted in large part because it was the payment card networks, and not the banks, doing the actual work of fee setting and charging,\u201d Kendall wrote in her ruling.<\/p>\n

Based on those findings, Kendall denied plaintiffs\u2019 requests for a permanent injunction.<\/p>\n

Proponents of the IFPA cheered Kendall\u2019s ruling. The Illinois Retail Merchants Association, which backed the initial legislation, called the ruling \u201ca historic win for Main Street over Wall Street\u201d that \u201cwill save businesses and consumers millions of dollars a year.\u201d<\/p>\n

\u201cAs the first law in the nation to restrict onerous swipe fees, we hope this measure can serve as a model for other states to seek relief for businesses and working families struggling with higher costs,\u201d Rob Karr, chief executive and president of the Illinois Retail Merchants Association, said in a statement.<\/p>\n

Other merchant organizations echoed Karr\u2019s sentiments. \u201cThis is a good and well-reasoned ruling that provides full vindication for what Illinois [legislators] did and what other states looking to regulate interchange may do,\u201d whether it is passing a similar law or taking a different approach to interchange regulation, says Doug Kantor, an executive committee member at the Merchants Payment Coalition and general counsel for the National Association of Convenience Stores.<\/p>\n

As of July 2025, bills to regulate interchange had been introduced or previewed before lawmakers in\u00a022 states<\/a><\/strong>, according to the Electronic Transactions Association.<\/p>\n

Plaintiffs in the case, which include the Illinois Bankers\u2019 Association, the Illinois Credit Union League, and the American Bankers\u2019 Association, expressed disappointment in Kendall\u2019s ruling and vowed to appeal it.<\/p>\n

\u201cThe decision not to protect the payment system from this misguided state law is a serious error that will unleash chaos and confusion on Illinois consumers and businesses,\u201d co-plaintiffs said in a statement. \u201cWe cannot let that stand.\u201d<\/p>\n

Co-plaintiffs also renewed their call for state lawmakers to\u00a0repeal the IFPA<\/a><\/strong>\u00a0\u201cbefore it can do any more harm to the Illinois economy. The fight over IFPA and any similar proposal will continue.\u201d<\/p>\n

The Electronic Payments Coalition, which has weighed in with an\u00a0amicus brief<\/a><\/strong>, issued a statement saying the IFPA threatens to upend the card-based payments system and should be overturned.<\/p>\n

\u201cThis 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,\u201d EPC executive chairman Richard Hunt said in a statement.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Peter Lucas\u00a0February 11, 2026\u00a0Acquiring,\u00a0Competitive Strategies,\u00a0Credit Cards,\u00a0Debit Cards,\u00a0Issuing\/Originating,\u00a0Law and Regulation,\u00a0Mobile Commerce,\u00a0Point-of-sale,\u00a0Pricing,\u00a0Transaction Processing Illinois merchants scored a big victory late Tuesday in their battle for interchange relief as United States District Court Judge Virginia Kendall upheld the Illinois Interchange Fee Prohibition Act. The decision, which comes after more than a year of legal wrangling, means the IFPA … Continue reading Illinois Merchants Score a Big Win in Their Battle for Interchange Relief<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-901","post","type-post","status-publish","format-standard","hentry","category-news-update"],"_links":{"self":[{"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/901","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=901"}],"version-history":[{"count":1,"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/901\/revisions"}],"predecessor-version":[{"id":902,"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/901\/revisions\/902"}],"wp:attachment":[{"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.paymentconsulting.net\/Blog\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}