Opponents Ask for Summary Judgement in Their Legal Battle to Overturn Illinois’s Interchange Law

Plaintiffs seeking to overturn Illinois’s interchange law filed a motion for summary judgement earlier this week and requested that the state’s attorney general drop the case to enforce the law, which is scheduled to go into effect July 1. A motion for summary judgment asks a court to decide a case without a trial.

The motion was filed Monday by the American Bankers Association, Americas Credit Unions, The Illinois Bankers Association, and the Illinois Credit Union League. Plaintiffs say they filed the motion because they believe the judges’ earlier rulings paved the way to do so. 

United States District Court Judge Virginia Kendell last month granted a preliminary injunction exempting financial institutions chartered outside Illinois but doing business in the state from complying with the law, known as the Interchange Fee Prohibition Act (IFPA). Illinois chartered financial institutions, credit unions, federally chartered credit unions, and the card networks were excluded from that ruling.

Organizations representing credit unions said the latest motion is the next step to overturn the IFPA in the courts. “This is the next and important step in our path to strike down this law for credit unions. Should this law go into effect it would be impossible to comply with and [would] cause a complete penalization of how payments operate for all those who conduct business in Illinois,” Carrie Hunt, America’s Credit Unions chief advocacy officer, said in a statement.

Under the IFPA, merchants will pay interchange only on the pre-tax amount of a purchase. Tips are also exempted from interchange under the law.

Plaintiffs argue in the motion that only by including all participants in the payment card business will the court provide relief by preventing a patchwork of state laws and regulations from undermining the National Banking Act.

“Finally—and crucially—the Court should enter a permanent injunction that covers not only federal and out-of-state banks, savings banks, and credit unions, but also other participants in the tightly intertwined payment system when they perform functions necessary to those institutions’ federally protected payment businesses,” plaintiffs say in the motion.

Plaintiffs argue that “absent this relief,” the IFPA would “indirectly (and improperly) restrict federally protected institutions in ways the Court has already determined the State cannot do directly.”

The motion was accompanied by a declaration from Anthony Hayes, founder of the Banking & Payments Group LLC, a Boston-based consultancy launched in 2023. Plaintiffs are calling Hayes as an expert witness. In his declaration, Hayes states the plaintiff’s legal counsel asked him to submit his opinion on the law. Hayes concludes that all parties in the payment card ecosystem should be granted relief by the motion for summary judgement.

If one financial institution associated with a card transaction has injunctive relief from the IFPA, he writes, “all entities involved in the processing of the same transaction also need relief from the requirements of the IFPA, at least for purposes of that transaction.”

The Illinois Retail Merchants Association said it had nothing to add regarding the latest development beyond what it has said already regarding the case.

The next hearing in the case is scheduled for mid-April.