An Illinois law will change the payment processing system as it currently exists if enacted, Northpoint Insight’s Glenn Grossman wrote in Crain’s Chicago Business.
America’s Credit Unions, the Illinois Credit Union League, and banking groups filed a challenge against the Interchange Fee Prohibition Act — which was signed into law in June and would take effect July 1, 2025.
Once in effect, financial institutions would be banned from charging or receiving interchange fees in Illinois on the portion of a debit or credit card transaction attributable to tax or gratuity.
Grossman notes that the law will result in many costly compliance challenges for small businesses, bring uncertainty that comes with a lack of standards, and result in less consumer choice.
“The Interchange Fee Prohibition Act is a flawed law that will harm both taxpayers and small businesses across Illinois,” he wrote, adding, “given the significant loss of revenue to the payment card industry, accepting payments through debit or credit cards with sales tax or gratuities may no longer be supported in the state of Illinois.”
Grossman will be a part of a panel discussion on interchange at the upcoming America’s Credit Unions Congressional Caucus next week. The panel will discuss legal efforts against the Illinois Law, the Big Box Bailout bill, the Federal Reserve’s debit interchange proposal, and more.
