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A bill was introduced late Tuesday in the Illinois House of Representatives seeking to repeal the Interchange Fee Prohibition Act. The legislation, introduced by Rep. Margaret Croke, chairperson of the House Financial Institutions and Licensing Committee, is the latest twist in an ongoing battle over the IFPA, which became law in June.
This new legislation, consisting of a single sentence, simply calls for the repeal of the Interchange Fee Prohibition Act “effective immediately.”
Supporters are planning to introduce a similar bill in the Illinois Senate at a later date. That bill will be introduced by Mark Walker, chairperson of the Senate Financial Institutions Committee, according to the Community Bankers Association of Illinois, a supporter of both bills.
“The idea was to keep the bill simple and call for the repeal of the Interchange Fee Prohibition Act, nothing more,” says Jerry Peck, senior vice president for government relations at the Community Bankers Association of Illinois.
The impetus for the bill is twofold. First, some legislators have had concerns that the IFPA was introduced and voted on at the eleventh hour as part of Illinois’s state budget without proper debate, according to Peck.
“The bill was passed at the last minute as part of the budget, and legislators really didn’t have the time to properly consider it, and there are legislators that didn’t like how the law came to be,” Peck says. “If the law gets repealed, the legislature can revisit the issue in more detail and draft new legislation if it wants.”
Secondly, introducing a bill to repeal the IFPA serves as a hedge against opponents of the law losing their lawsuit to overturn it. Several organizations representing banks and credit unions filed the lawsuit in August. The 257-member Community Bankers Association of Illinois was not among the plaintiffs.
In December, a federal judge issued an injunction placing a temporary hold on the law, which was scheduled to go into effect July 1, 2025.
In issuing the injunction, the judge ruled the law supersedes federal banking laws. As a result, federally chartered financial institutions in Illinois are temporarily spared from having to comply with the law, while non-federally chartered institutions in the state, along with processors and the card networks, are not.
Additional arguments have since been made before the judge to include non-federally chartered financial institutions and other entities such as processors, under the injunction. The judge is expected to rule on those arguments in a few weeks.
“An injunction that applies only to federally chartered banks in the state is not effective, because it does not provide relief for all financial institutions in the state that will be affected by the IFPA,” Peck says. “Whether this issue is addressed through legislation or the courts, our aim is to bring our members relief.”
The Illinois Retail Merchants Association, a strong supporter of the IFPA, indicated it had expected the legislation to be introduced. “This proposal is not a surprise given the ongoing legal challenge brought by banks and credit card companies seeking to protect their ability to unilaterally raise swipe fees on businesses and consumers,” Rob Karr, president and chief executive of the Illinois Retail Merchants Association, says by email.
Karr went on to applaud Illinois Governor JB Pritzker and members of the Illinois House and Senate “for taking a stand against swipe fees in an effort to provide tangible relief to Illinois families and retailers of all sizes.”
As to the bill’s prospects, Peck says some 8,000 bills get introduced during each legislative session in Illinois and about 400 make it to the governor’s desk. “It’s a not a slam dunk this bill will pass, but it is a way to hedge our bets.”
