Illinois lawmakers voted to delay implementing a state law that limits some credit card fees.
The Interchange Fee Prohibition Act was set to take effect on July 1 but was delayed to July 1, 2027, during the spring legislative session.
When customers use credit cards, businesses typically pay credit card companies an interchange fee on each transaction, including sales tax and workers’ tips, that ranges from about 2% to 4%.
In 2024, Illinois passed a first-in-the-nation law to end credit card fees on sales tax and tips that businesses pay. But credit card companies and banking associations are fighting the legislation.
Retail associations and some small businesses decried the delay.
“For the second year in a row, Illinois lawmakers chose to protect the bottom line of big banks, credit card companies and payment processors over ensuring meaningful financial relief for consumers, neighborhood retailers, restaurants and bars,” Rob Karr, CEO of the Illinois Retail Merchants Association, said in a statement.
“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,” Karr said.
Mark Robertson, president of 2Bears Tavern Group, said, “Bluntly, this delay shows that the Illinois legislature is just as controlled by the big financial interests as the federal government is beholden to.” 2Bears owns five North Side bars, including Marty’s Martini Bar in Andersonville.
Robertson said the delay “harms us and all small businesses. We are constantly told to keep paying more and wait. Yet again our elected officials failed us.”
Banking associations have sued the state to fight the law. A federal judge upheld parts of the law in February, but the plaintiffs appealed. Plaintiffs include the Illinois Bankers Association, American Bankers Association, America’s Credit Unions and the Illinois Credit Union League. Last month, the 7th Circuit U.S. Court of Appeals sent the case back to a lower court.
Banking associations welcomed the delay.
“This reasonable step will protect Illinois businesses and consumers from facing payment chaos in just a month, without interrupting our ongoing legal challenge to IFPA,” banking industry plaintiffs said in a statement.
The Electronic Payments Coalition, which represents Visa, Mastercard and banks, urged lawmakers to repeal the law.
“This latest delay is yet another acknowledgment that lawmakers rushed through a deeply flawed law without fully understanding the consequences. Unfortunately for Illinois consumers, small businesses, community banks and credit unions, delaying the chaos is not the same as fixing it. The only real solution is full repeal,” Richard Hunt, Electronic Payments Coalition’s executive chairman, said in a statement.
