Illinois Delays Swipe Fee Ban for Another Year

The Illinois legislature voted Monday (June 1) to delay implementation of the Interchange Fee Prohibition Act (IFPA) for a year.

If the bill containing this provision (SB3645) is signed into law by the governor, the act will be effective July 1, 2027, rather than July 1, 2026, according to the website of the Illinois General Assembly.

The IFPA prevents banks and credit card companies from instituting interchange fees, which are otherwise known as “swipe fees,” on the sales tax and tip portions of credit and debit card transactions, PYMNTS reported in April.

It was signed into law in June 2024 and was soon contested in a lawsuit brought by the Illinois Credit Union League, America’s Credit Unions, Illinois Bankers Association and American Bankers Association.

The law was initially scheduled to go into effect on July 1, 2025, but it was delayed last year. On June 1, 2025, the Illinois legislature voted to delay the implementation of the interchange fee law until July 1, 2026. Illinois Gov. JB Pritzker signed that legislation on June 16, 2025.

America’s Credit Unions said in a Monday press release that Pritzker is expected to sign the annual budget legislation that includes the latest delay of the implementation of the interchange fee law.

“The Illinois General Assembly’s extension of the Interchange Fee Prohibition Act’s effective date is a win for consumers and credit unions,” America’s Credit Unions President and CEO Scott Simpson said in the release. “However, ongoing litigation and the recent rules from the OCC [Office of the Comptroller of the Currency] and NCUA [National Credit Union Administration] reinforce that more action is needed. Even with an extension, if the law takes effect, Illinois’ state-chartered credit unions and community banks will be at a disadvantage as federal institutions are preempted.”

The NCUA is in the process of issuing a final rule saying federal law preempts the IFPA, and the OCC has already taken similar actions, according to the release.

The Illinois Retail Merchants Association, which favors the interchange fee law, said in a Monday post on LinkedIn that the state’s lawmakers had delayed implementation of the law for the second year in a row.

“At a time when lawmakers claim to be focused on improving affordability and supporting community businesses, this action stands in sharp contrast to their words,” Illinois Retail Merchants Association President and CEO Rob Karr said in a statement shared in the post. “The fight against onerous swipe fees is not over, and we remain hopeful the courts will ultimately uphold this vital relief package.”

The Merchants Payments Coalition said in a Monday press release that the delay of the implementation of the law will cost Illinois consumers and businesses $500 million.

“Big banks’ scare tactics are costing hard-working people in Illinois real money,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said in the release.