Illinois Governor Signs 1-Year Delay of Law Limiting Interchange Fees

Illinois has delayed for one year the implementation of a law that would bar companies from charging interchange fees on the tax and tip portions of credit and debit card transactions.

The state’s governor, J.B. Pritzger, signed legislation (HB0742) Monday (June 16) that delays the implementation of the Interchange Fee Prohibition Act (IFPA) until July 1, 2026. The law was previously set to go into effect July 1, 2025.

The bill that delays the law passed both houses of the Illinois state legislature June 1 and was sent to the governor, who had 60 days to act on it.

The Illinois Credit Union League, which is among the financial services organizations that filed a lawsuit opposing the IFPA, welcomed the signing of the bill in a Tuesday (June 17) press release.

“While litigation challenging the law proceeds, it is imperative to provide relief to credit unions, local banks, Main Street businesses and consumers throughout the state of Illinois — all who stand to be negatively impacted by this law,” Ashley Sharp, senior vice president of state advocacy and legislative counsel for the Illinois Credit Union League, said in the release.

A proponent of the IFPA, the Illinois Retail Merchants Association, said in a June 1 press release, after the legislature passed HB0742 and sent it to the governor, that it was “disappointed” by the move to delay the law.

The IFPA was signed into law on June 7, 2024.

It was then challenged by a lawsuit filed by the Illinois Credit Union League, America’s Credit Unions, Illinois Bankers Association and American Bankers Association.

The lawsuit claimed that the IFPA is preempted by federal law, including the 2010 Durbin Amendment. The co-plaintiffs also argued that if the state law takes effect, it will throw the payment system into “chaos,” undermine the benefits provided by credit and debit cards, and violate several federal statutes.

U.S. Sen. Dick Durbin, the author of the Durbin Amendment, filed an amicus brief in support of the IFPA in October, challenging the lawsuit’s claim that the IFPA is preempted by federal law.

Durbin said at the time in a press release that the IFPA is consistent with the intent of the Durbin Amendment, which sought to reduce “excessive debit interchange fees” and “created a ceiling — not a uniform standard — for debit interchange fees.”