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The Interchange Fee Prohibition Act doesn’t ban or restrict
credit card swipe fees, but it limits banks from charging
interchange fees on tax and tip revenues. The law, which was
backed by the Illinois Retail Merchants Association, was the
first such statute in the country.
Banking trade groups argued in court that the law would “throw
well-operating payment card systems into chaos.”
“We also joined this lawsuit to strongly defend the dual banking
system President Lincoln created in 1863 that has served our
nation so well,” said Rob Nichols, president of the American
Bankers Association.
The Center for Legal Action for the American Free Enterprise
Chamber of Commerce has now filed an amicus brief in the ongoing
lawsuit against the Act. The brief lays out two specific ways
the IFPA would upend the principles of the National Bank Act of
1863, passed during the Civil War to inject uniformity and
stability to a fragmented banking system consisting of disparate
state laws.
“Left unchecked, the IFPA would not only inflict untold consumer
harm in the form of increased fees, but also take the nation
backwards to a Civil War era patchwork banking system marked by
instability and confusion,” said Machalagh Carr, Director of
AmFree’s Center for Legal Action.
The Office of the Comptroller of the Currency, an independent
bureau of the U.S. Department of the Treasury, has also filed an
amicus brief against the law, saying it's "misguided" and will
leave national banks with "extraordinary operational burdens."
"[Illinois' Interchange Fee Prohibition Act] prevents or
significantly interferes with national banks’ exercise of their
power under the [National Banking Act] to process electronic
payment transaction data," the OCC filing said in asking for a
preliminary injunction. "The national bank powers infringed upon
by the IFPA are of fundamental importance to maintaining a safe
and sound banking system."
Gov. J.B. Pritzker said the change was the best outcome for
Illinois retailers, who will also be capped in the discount they
get for collecting and remitting sales taxes. Pritzker said he
is confident that the state of Illinois will prevail in court.
“When things get brought to court, you never know how they’ll
turn out,” said Pritzker. “I think this one can be defended well
and we’ll end up with the law we have on the books being
affirmed.”
The law is set to take effect July 1, 2025, unless a court steps
in and blocks the implementation of the legislation. |
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