Illinois' 'Swipe Fee' Law on the Brink After Another Delay, Adverse Court Ruling
A federal judge said the law is preempted for banks and card networks, putting about $120 million to $200 million in annual revenue at risk, retailers said.
- On Monday, U.S. District Judge Virginia Kendall issued a permanent injunction against the Illinois Interchange Fee Prohibition Act, blocking the state law that restricted swipe fees on restaurant tax and tip charges.
- The ruling follows an interim final rule issued last month by the Office of the Comptroller of the Currency that specifically preempts the Illinois measure, claiming federal law protects national payments systems from conflicting state requirements.
- Although Kendall criticized the OCC's timing as "unflattering," she concluded the agency met procedural requirements, finding the IFPA creates "an obstacle to the accomplishment and execution of the full purposes and objectives" of federal banking powers.
- Illinois lawmakers voted this week to delay the law's effective date to July 1, 2027, while Illinois Retail Merchants Association CEO Rob Karr called the injunction a "temporary setback" and promised further legal action.
- Legal uncertainty persists because the permanent injunction does not apply to credit unions or Illinois-chartered banks, leaving those entities potentially subject to the state law despite the federal court's decision.
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Illinois’ ‘swipe fee’ law on the brink after another delay, adverse court ruling
From Capitol News Illinois: An Illinois law banning “swipe fees” on taxes and tips — already delayed twice by lawmakers — appears to be on life support after a federal judge who once permitted it issued a permanent injunction against it this week
Illinois' 'swipe fee' law on the brink after another delay, adverse court ruling
An Illinois law banning "swipe fees" on taxes and tips — already delayed twice by lawmakers — appears to be on life support after a federal judge that once permitted it issued a permanent injunction against it this week.
Judge says federal rule blocks IL from banning ‘swipe fees’ – Legal Newsline
Federal law blocks the state of Illinois from prohibiting both banks from outside Illinois and payment card servicers, like Visa and Mastercard, from charging so-called "swipe fees" on sales taxes that are charged or gratuities added on when customers use a credit or debit card to make a purchase, a federal judge has ruled.
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