Pritzker signs swipe fee ban amid intense court battle between banks, retailers

SPRINGFIELD, Ill. (WAND) — Gov. JB Pritzker signed a bill into law Monday delaying the Illinois ban on swipe fees for another year. Banks are celebrating the move while small businesses are expressing concern for the future.

Retailers only receive a portion of the money each time you swipe at a register as banks and credit unions take the vast majority of funds. There was a bipartisan effort to ban these fees last year, but banks claimed it could cause chaos without a compliance system.

"We're talking about a global payment system," said Ashley Sharp, legislative counsel for the Illinois Credit Union League. "There are international standards that come into play when we talk about card processing and there are a lot of different parties to a single electronic transaction that have to understand how that process works to enable the process to move smoothly without interruption or disruption."

The Illinois Retail Merchants Association argues limiting swipe fees to goods and services could reduce the financial burden on consumers and retailers. Banks and retailers have spent most of the past year in a court battle over the interchange fee law.

Now, IRMA President and CEO Rob Karr is upset his members will have to wait even longer for implementation.

"Those fees are sometimes the second to third largest expense item for a retailer," Karr said. "Again, a retailer has no choice in doing that. All we were saying is it shouldn't be applied to the sales tax portion. We're doing that on behalf of the state. We shouldn't have to pay those costs, particularly because the state cut the retail discount."

A partial preliminary injunction was granted in December by a federal judge, ruling that national banks, federal savings banks, and out of state banks would be exempt from complying with the Illinois law. Yet, Illinois chartered banks and credit unions would still have to comply.

Sharp told WAND News state lawmakers should seriously consider repealing the law.

"We greatly appreciate their recognition that there is a problem here," Sharp said. "This law does require some more careful consideration, especially given the pending litigation and the result that might stem from that."

House Bill 742 passed out of the Senate on a 52-4 vote and received a 103-9 vote in the House.

Karr stressed that IRMA is committed to ensuring the law is not delayed further. He told WAND News the organization will urge lawmakers to renew their promise to stop swipe fees.