Latest news with #IllinoisBankersAssociation
Yahoo
a day ago
- Business
- Yahoo
Amid court battle, lawmakers look to push back ‘swipe fees' ban
SPRINGFIELD – Illinois lawmakers have decided to delay a ban on 'swipe fees' for another year as bankers are locked in a court battle with the state over the ban. Lawmakers passed the Interchange Fee Prohibition Act last spring as part of the legislative package that enacted the state budget. It prohibits financial institutions from charging fees on the tax and tip portions of credit and debit card transactions. The rest of the transaction, including the price of goods or services, would still be subject to the fees. The ban was supposed to take effect on July 1, but lawmakers voted with strong bipartisan majorities Sunday morning to pass House Bill 742 to push the ban back until July 2026. Banking groups filed a lawsuit last August challenging the law on the grounds it superseded federal banking regulations. Bankers argued the law forces banks and credit card companies to implement costly new computer systems to differentiate between the transaction, tax and tip, and contended they can't comply with the law by July 1. A federal judge issued a preliminary injunction in December preventing the law, once it takes effect, from applying to federally chartered banks while declining to extend the injunction to state banks and credit card companies. In February, the judge declined to extend the injunction to credit unions, though it was extended to out-of-state banks that operate in Illinois. The case has remained unresolved in the courts since then, leading lawmakers to push back the start of the ban. The measure pushing back the effective date still needs approval from Gov. JB Pritzker. Banking groups supported the delay and continued their messaging campaign against the underlying legislation that passed a year ago. 'This law will cause widespread economic disruption, and mounting evidence shows that the measure overwhelmingly benefits corporate megastores while placing an undue financial burden on small businesses and smaller financial institutions that form the backbone of our local economies,' Illinois Bankers Association Executive Vice President Ben Jackson said in a statement. The ban was a request of the Illinois Retail Merchants Association as part of a deal during budget negotiations last spring. State lawmakers capped a monthly sales tax deduction claimed by retailers at $1,000 to generate $101 million to fill a budget hole. In exchange, lawmakers passed the ban on swipe fees. IRMA said in a statement it was disappointed lawmakers have decided to delay the ban. 'By refusing to require compliance as originally intended, legislators are again taking hundreds of millions of dollars out of the pockets of working families and Main Street businesses and giving it to big banks, credit card companies and credit card processors,' IRMA CEO Rob Karr said in a statement. However, other business groups such as the Illinois Chamber of Commerce said lawmakers made the right decision and urged the legislature to fully repeal the law. Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Chicago Tribune
3 days ago
- Business
- Chicago Tribune
Amid challenge from banks, Illinois legislators move to delay ban on certain credit card fees
Illinois legislators voted to delay for one year a ban on certain credit card fees that was set to take effect July 1 amid a legal challenge by banks. A measure passed by legislators and signed into law by Gov. JB Pritzker last year would prevent banks and credit card companies from charging retailers a small fee on sales taxes and tips. Pritzker still has to sign off on the legislature's move to extend the deadline to July 1, 2026. Pritzker on Sunday said that while the delay wasn't his initiative, he anticipated the interchange fee issue 'will probably get resolved over the next year' as it is currently with the courts. Retailers who support the measure say the fees come at a cost to consumers. Banks say the law would create large costs within the payment processing system and inconvenience both businesses and customers. They've also said don't have the infrastructure in place to implement the ban. 'On the banking side, certainly, the technology doesn't exist, nor do we think it will any time soon,' Ben Jackson, executive vice president of government relations at the Illinois Bankers Association, said Monday. The technology needed will still not be ready by July 2026, he said. Rob Karr, president and CEO of the Illinois Retail Merchants Association, said in a statement Sunday that the delay would take money out of the pockets of Illinoisans and businesses by continuing to allow the fees. 'We remain committed to ensuring this law is not delayed further and urge lawmakers to renew the promise they made to stop the swipe fee greed that's driving up prices and making it harder for families and businesses to make ends meet,' Karr said. The provision on so-called interchange fees was tucked into last year's revenue bill in an effort to provide relief to retailers as the state enacted some $101 million in tax hikes on retailers. Banks ever since then have said the effective date was too soon. Illinois would be the first state to require a distinction on consumer retail transactions between goods, taxes and tips, creating the need for what opponents say would be a complicated and expensive software change. While the fight over over the ban reflects the national political battle between interest groups representing retailers and financial services like Visa and MasterCard, the Illinois law is separate from federal legislation on interchange fees that has been pushed by U.S. Sen. Dick Durbin. The federal lawsuit filed by the banking interests that challenges the ban has inched forward throughout the spring but it wasn't clear whether a final ruling would be reached by July 1. Financial companies scored a partial victory in court when a federal judge in December agreed to put a temporary hold on the law for some types of institutions including national banks, meaning that they don't need to comply with the law as court proceedings continue. That relief was later expanded to out-of-state banks doing business in Illinois, but other entities including in-state banks remain subject to the law. The IBA as well as the American Bankers Association, America's Credit Unions and the Illinois Credit Union League are plaintiffs in the suit, which names Illinois Attorney General Kwame Raoul as a defendant. An effort to repeal the law completely did not advance the spring legislative session, while the vote for the delay came on the session's last day. The Electronic Transactions Association, an association representing large companies including Visa, American Express and Bank of America, issued a statement Sunday applauding the decision to put the ban off for the year.
Yahoo
4 days ago
- Business
- Yahoo
Guard Your Card Illinois: Illinois General Assembly Delays Implementation of Flawed Interchange Fee Prohibition Act
Small Businesses, Local Financial Institutions and Consumers Temporarily Spared From Chaos While Federal Court Challenge Continues to Dismantle This Misguided Policy SPRINGFIELD, Ill., June 1, 2025 /PRNewswire/ -- The Illinois General Assembly has delayed the implementation of the flawed Interchange Fee Prohibition Act to July 1, 2026, according to Guard Your Card Illinois. This law is currently being challenged in federal court, with a partial preliminary injunction giving protections to federally chartered and national institutions while leaving Illinois banks, credit unions, small business owners and consumers in the path of chaos. "We thank the Illinois General Assembly, House Speaker Chris Welch and Senate President Don Harmon for extending the effective date of the Interchange Fee Prohibition Act to July 1, 2026," said Ben Jackson, Executive Vice President of the Illinois Bankers Association. "This law will cause widespread economic disruption, and mounting evidence shows that the measure overwhelmingly benefits corporate megastores while placing an undue financial burden on small businesses and smaller financial institutions that form the backbone of our local economies. In the coming months, we will urge the Illinois General Assembly to act in the best interest of their constituents by fully repealing this law." Last May, an undebated, last-minute provision was included in Illinois' budget package that will establish Illinois as a radical outlier in the global payments system and will upend the way credit and debit cards work across the state. With no workable technology and no system in place as it has never been implemented anywhere in the world, it is unknown how Illinois financial institutions, business owners and consumers will be able to comply with the law. Illinois consumers could be forced to pay tax or gratuity in cash or by check, and purchases might require two transactions. "Credit unions across Illinois appreciate the General Assembly's recognition of the urgent need for relief from the Interchange Fee Prohibition Act," said Ashley Sharp, Senior Vice President of State Advocacy and Legislative Counsel for the Illinois Credit Union League. "This misguided policy will negatively impact the consumers we serve, and we will continue our efforts to have this law fully repealed." The Illinois Bankers Association and the Illinois Credit Union League were among a group of plaintiffs who filed litigation to challenge the law last August. A partial preliminary injunction was granted in December, ruling that national banks, federal savings banks and out of state banks would be exempt from complying from the law. However, Illinois' own state-chartered banks, as well as state and federal credit unions, will still have to comply with this law. "The Community Bankers Association of Illinois appreciates the General Assembly taking the prudent approach of delaying the implementation of the IFPA," said Jerry Peck, Senior Vice President of government relations at the Community Bankers Association of Illinois. "We look forward to continued conversations with lawmakers about the unintended negative consequences this deeply flawed law will have for consumers and small business." Last October, the Office of the Comptroller of the Currency, which charters and examines national banks, filed an amicus brief stating that the IFPA "is an ill-conceived, highly unusual and largely unworkable state law," and "it is likely that fraud risk would increase significantly, consumer services would be constrained, and public trust would decline." Small businesses will be left with headaches from this law while corporate megastores will be the beneficiaries. A new study analyzing the cost implications of an Illinois credit card law shows 40 of the largest retailers will soak up nearly 40 percent of the estimated $118 million reduction in interchange. This is why corporate megastores have publicly supported similar legislation in other states. "The Illinois General Assembly took a step in the right direction by delaying the implementation of the Interchange Fee Prohibition Act, a law that will disrupt a system that has worked efficiently for decades and threaten the economic vitality of small businesses across our state," said Lou Sandoval, President and CEO of the Illinois Chamber of Commerce. "The Illinois Chamber of Commerce urges lawmakers to repeal this law and focus on policies that support small businesses across Illinois." The Illinois State Black Chamber of Commerce and the Illinois Hispanic Chamber of Commerce have advocated for a repeal of this law due to the harmful impact it will have on small businesses across the state. "Delaying the implementation of this misguided policy gives small business owners the protections they deserve while the law continues to be challenged in federal court," said Larry Ivory, President and CEO of the Illinois State Black Chamber of Commerce. "We urge Illinois legislators to repeal this law before it harms over one million small businesses across the state." "We welcome the decision to delay the implementation of IFPA, but it's clear that this law will have serious unintended consequences on small businesses who are the backbone of Illinois' economy," said Jaime di Paulo, President and CEO of the Illinois Hispanic Chamber of Commerce. "If enacted, this law will limit payment options for small retailers, disrupt existing financial systems, and ultimately increase costs for consumers. For Latino-owned businesses, many of which operate with thin margins and limited access to capital, this kind of disruption could be devastating. While the extension is a good start, we still urge the Illinois legislature to repeal this misguided law and prioritize the needs of our local entrepreneurs and communities." To learn more, visit View original content to download multimedia: SOURCE Guard Your Card Illinois Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Chicago Tribune
07-02-2025
- Business
- Chicago Tribune
Banks opposing state's landmark credit card fees law keep up arguments in court, Springfield
Financial services companies in Illinois are fighting a landmark state law on credit card fees in court and in Springfield as banks get closer to a July 1 implementation they say they're not equipped to meet. 'The rails are not built for this train to move on. Like, they are not constructed. They don't even know — the engineering part is not done yet, let alone tracks laid down,' Ben Jackson, executive vice president of government relations at the Illinois Bankers Association, said after a downtown status hearing on the lawsuit Thursday. The first-of-its-kind law, signed by Gov. JB Pritzker after being passed by Illinois lawmakers last year, will ban banks and credit card companies from charging retailers a small fee on sales taxes and tips. Retailers who support the measure say they're advocating for consumers while banks claim the law could create chaos in transactions that will inconvenience businesses and their customers. Financial companies scored a partial victory in court when a federal judge in December agreed to put a temporary hold on the law for some types of institutions including national banks, meaning that they don't need to comply with the law as court proceedings continue. That relief was expanded this week to out-of-state banks doing business in Illinois, but other entities including payment networks, federal credit unions and in-state banks remain subject to the law. The IBA as well as the American Bankers Association, America's Credit Unions and the Illinois Credit Union League are plaintiffs in the suit, which names Illinois Attorney General Kwame Raoul as a defendant. As the lawsuit is being hashed out in federal court in Chicago, opponents are also laying the groundwork for a possible reversal of the law in Springfield, where it was part of the sweeping Democratic-led revenue package last year. State Rep. Margaret Croke, a Chicago Democrat who heads the committee covering financial institutions, last week introduced a bill that would repeal the law completely. However, there are no plans to move the bill 'until there is resolution from the courts,' she said. Jackson said he's hoping for a ruling in his group's favor from U.S. District Judge Virginia Kendall by mid-spring. 'Then we can return to the legislature and say, 'Let's repeal this entire thing'' before the General Assembly's legislative session ends in May, he said. While the plaintiffs in the lawsuit have claimed the partial injunction issued by Kendall as a win, proponents of the law and even some banking interests downplayed it, saying a partial injunction doesn't offer much of a solution since credit card companies and other parts of the transaction process are all connected. 'Unless the injunction applies to every party, it doesn't really apply relief to any of the parties,' Jerry Peck, senior vice president of government relations at the Community Bankers Association of Illinois, said Thursday. The CBTI isn't a plaintiff in the lawsuit but is backing Croke's bill to repeal the law. Credit card companies and financial institutions currently charge retailers and restaurants a fee when consumers use credit cards, based on the total transaction amount of the goods, tax and any tip. The law would bar the financial institutions from charging the so-called interchange fees on the tax or gratuity portions of customers' bills, with the goal being to lower the amount that credit card companies can charge retailers. Credit card fees average just over 2% of retail transactions, according to the National Retail Federation, meaning about $98 of every $100 sale goes to the retailer. Opponents argue the law will create inconvenience for anyone in Illinois who uses a credit or debit card as banks and credit card companies struggle to implement it, as well as lead to major costs to financial services. Retailers who support the ban say the so-called interchange fees are hidden charges that get passed down to customers. The Illinois Retailers Association asked to be added to the case as an intervening party, but Kendall denied that request last week. Peck said given the steep penalties that could be imposed under the law, some small banks have considered no longer offering credit or debit card services as a result. Those banks are also trying to figure out whether they need additional staff or accountants to implement the law, he said. 'That potential thousand dollar fine per swipe could put a bank out of business,' said Peck, whose association's members include small Chicago-area banks like Devon Bank. In June, a trade association representing credit card companies and banks began running online ads in Illinois declaring that the law may force consumers to pay for parts of their purchases in cash, as well as print ads saying, 'Tipping on your credit card is closed to Illinoisans.' In addition to being generally opposed to the law, banks and credit card companies say the timeline to comply is unrealistic. Illinois would be the first state to require a distinction on consumer retail transactions between goods, taxes and tips, creating the need for a complicated software change, opponents say. The change has kicked off a policy battle on multiple fronts. Peck, of the community bankers group, said the purpose of pushing a bill on the issue in Springfield this session while also fighting in court is to 'give ourselves belts and suspenders.' Rob Karr, head of the state retailers' association, said in a statement that the bill was '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.' The new Illinois law is separate from federal legislation on interchange fees pushed by U.S. Sen. Dick Durbin, but it similarly affects Visa, Mastercard and other large financial services companies.
