Consumers Strongly Support Illinois Interchange Law, Proponents Say

The Illinois Retail Merchants Association released a survey late Wednesday showing that voters in the state support the Illinois Interchange Fee Prohibition Act passed earlier this year.

The survey comes hard on the heels of a lawsuit filed last month by several organizations representing banks and credit unions challenging the law.

Some 74% of voters say they support the law, which will prohibit banks and credit card companies from levying interchange fees on the tax and tip portion of a credit or debit card transaction. In exchange, the state of Illinois will cap what merchants in the state earn for collecting sales tax at $1,000 per month. Prior to passage of the law in June, Illinois merchants were allowed to keep 1.75% of the sales tax collected per month as compensation for acting as agents of the state. The deal was reportedly one of the most generous sales-tax discount programs for local merchants in the country.  

In addition to voter support for the law, 86% of respondents agree it is unfair for banks and credit card networks to charge businesses swipe fees on the sales tax they collect for the state of Illinois and local government.

Other findings reveal that 82% of respondents agree it is unfair to workers and businesses to charge swipe fees on top of their tips and 84% of respondents agree that excessive swipe fees charged to businesses end up being paid by consumers in higher prices.

The survey, conducted on behalf of the IRMA by Tulchin Research/Impact Research polled 800 Illinois voters earlier this month.

The survey was conducted by the Illinois Retail Merchants Association to determine whether efforts to turn public opinion against the law are working. “We wanted to see if any of the confusion [about the law] the banks are spreading is working and it’s clear from the survey results the banks aren’t swaying anyone,” says Rob Karr, president and chief executive of the IRMA.

Karr adds that the poll also shows Illinois consumers are not supportive of interchange fees being levied on sales tax and tips for credit and debit card transactions and that the law will provide tangible relief to Illinois families and retailers of all sizes and types by limiting the fees financial institutions can charge on the sales and excise tax and tips portion of transactions.

“The idea that banning swipe fees would harm consumers is completely false, and this poll shows that voters see through those claims,” Karr said during a Wednesday press conference announcing the results of the survey. “It’s no surprise that a majority of Illinois voters support this commonsense measure to keep costs low for consumers and help small businesses save money, grow, and create jobs.”

The Illinois Bankers Association (IBA) and the Illinois Credit Union League (ICUL), both of which are plaintiffs in the lawsuit challenging the law, called the survey a “smokescreen” and described the questions asked in the survey as “leading”.

One of the questions, for example, asked consumers to agree or disagree with the following statement: “It is unfair for banks and credit card companies to charge businesses swipe fees on the sales tax they collect for the state of Illinois and local government. That’s like taxing a tax.”

Some 86% of respondents 86% agreed with the statement and 10% disagreed

“The poll clearly did not provide background to respondents on who would benefit,” says Ben Jackson, executive vice president of government relations for the Illinois Bankers Association. “The poll is an attempt to justify [the law] and not a very good one.”

In addition, the IBA and the ICUL say the law does not benefit consumers, nor does it mean bigger tips for workers or that workers can keep more of the tips.

“In fact, it could incentivize people not to leave a tip at all,” the two organizations say by email. “And the law doesn’t raise a single dollar for the state of Illinois. It simply forces banks, credit unions, small businesses, and everyone at the checkout counter to navigate a needlessly complex new system that rewards the state’s largest retail stores. No one else in the world has adopted this approach, and for good reason.”