SPRINGFIELD, Ill. (WAND) — An Illinois law banning swipe fees was set to take effect July 1. Yet, lawmakers decided to pass a bill in the final hours of session to delay implementation of the controversial law.
Your favorite coffee shops or boutiques only receive a portion of the money each time you swipe at a register due to interchange fees. Illinois was set to ban these fees at the end of the month, but bank and credit union leaders claimed it could cause chaos without a compliance system.Â
The Illinois Credit Union League is happy to see the plan delayed until July 1, 2026, but the organization hopes the General Assembly repeals the law soon.
"We're talking about a global payment system," said Credit Union League legislative counsel Ashley Sharp. "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."
Banks and retailers have spent most of the past year in a court battle over the interchange fee legislation.
The Illinois Retail Merchants Association said limiting swipe fees to goods and services will reduce the financial burden on consumers and retailers. IRMA President and CEO Rob Karr told WAND News that he is upset lawmakers kicked implementation further down the road.
"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."
WAND News asked Gov. JB Pritzker why lawmakers approved this delay Sunday. He said it wasn't his initiative.
"This is still sitting in the courts," Pritzker said. "I think the uncertainty is probably why it was brought up. But, I think it was only a one year push of the implementation date. So, this will be something that will probably get resolved over the next year."
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. Although, Illinois chartered banks and credit unions would still have to comply.
Sharp explained advocates worked hard to educate lawmakers on both sides of the aisle about the critical need to delay the change to help banks, retailers, and consumers. House Bill 742 passed out of the Senate on a 52-4 vote and received a 103-9 vote in the House.
"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."
Still, Karr said lawmakers are taking hundreds of millions of dollars out of the pockets of working families and main street businesses and giving it to big banks, credit card companies, and credit card processors. He stressed that IRMA is committed to ensuring the law is not delayed further and urge lawmakers to renew the promise they made to stop the swipe fees.
"I think they just succumbed to a bit of misdirection from the credit card companies," Karr said. "Unfortunately, the price is paid by Illinois consumers and main street."
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