Banks seek to permanently block the IFPA.
On March 17, the American Bankers Association, America's Credit Unions, the Illinois Banker Association, and the Illinois Credit Union League filed a motion seeking to have the preliminary injunction blocking the enforcement of the Illinois Interchange Fee Prohibition Act (IFPA) on nationally chartered banks, federal savings associations and out-of-state banks doing business in Illinois, made permanent. They also seek to have the injunction extended to cover federal and state credit unions, and the payment card networks.
The IFPA, which is set to take effect July 2025, prohibits the collection of interchange on sales taxes, excise taxes, and tips, if a merchant elects to separate out those charges from the price of a purchase. It also prohibits participants involved in an electronic payment transaction (except the merchant) from transferring or using data from that transaction except to facilitate or process the transaction, or as required by law. Each violation of the IFPA is subject to a $1,000 penalty per transaction for the merchant acquirer.
In December 2024, the US District Court granted a preliminary injunction blocking the enforcement of the IFPA on nationally chartered banks and federal savings associations, finding that plaintiffs' claims that the IFPA interferes with the National Bank Act and the Home Owners' Loan Act had a high likelihood of success. In February 2025, the Court found that the IFPA is also likely preempted under the Riegle-Neal Interstate Banking and Branching Efficiency Act and extended the injunction to cover out-of-state banks doing business in Illinois.
The fate of the IFPA remains uncertain. In addition to the pending lawsuit, a bill repealing the IFPA was introduced in the Illinois House of Representatives in January. If the bill advances and is signed by the governor the repeal will be effective immediately.
For more information:
- ABA Banking Journal - Illinois Interchange Lawsuit Summary
- Federal Reserve Regulation II - Debit Card Interchange Fees
