CHICAGO–The 7th Circuit Court has vacated the U.S. District Court for the Northern District of Illinois decision on the Illinois Interchange Prohibition Act, remanding the litigation back to the District Court for further proceedings.
As the CU Daily has been reporting, America’s Credit Unions and the Illinois CU League are co-plaintiffs in litigation over the law, which would prohibit card issuers, networks, and processors from charging interchange fees on the tax and tip portions of electronic card transactions. It is scheduled to take effect July 1.
Joint Statement Issued
In response to the decision, the credit union trade groups joined with the Illinois Bankers Association and the American Bankers Association in issuing a joint statement that said, “In light of the Seventh Circuit’s order, we welcome the opportunity to resume our legal challenge to the Illinois Interchange Fee Prohibition Act in district court. As we have consistently argued, the Illinois Interchange Fee Prohibition Act conflicts with federal law, and recent regulatory actions only reaffirm that fact.
“The Office of the Comptroller of the Currency’s recent interim final actions directly address the core issues in this case and further strengthen our position that IFPA is preempted by federal law. With the law scheduled to take effect in Illinois on July 1, it is critically important for all parties to recognize the need for a timely resolution to provide certainty for consumers, businesses and financial institutions.
“Even better would be for the Illinois legislature to recognize that IFPA was a mistake and repeal this misguided law, sparing Illinois consumers and businesses from payment chaos and confusion,” the statement added.
As a result of the ruling, oral arguments that had been scheduled for next week have been cancelled.
DCUC Issues Statement
In response to the decision, the Defense Credit Union Council expressed its support.
“This is a significant and encouraging development for financial institutions, consumers, and the stability of the nation’s payments system,” Jason Stverak, DCUC Chief Advocacy Officer, said in a statement. “The OCC’s recent actions recognize the serious legal, operational, and economic concerns created by the Illinois law and reinforce the importance of maintaining a consistent national framework for electronic payments.”
DCUC said it has been actively engaged on the issue since 2024, including formally urging the National Credit Union Administration (NCUA) to oppose the Illinois law and support federal preemption protections for credit unions. Most recently, DCUC sent a detailed letter to NCUA Chairman Kyle Hauptman requesting clarity on the agency’s authority to provide similar regulatory guidance and protections for federal credit unions following the OCC’s interim final rule and order.
“Credit unions should not face uncertainty or unequal treatment simply because their regulator has not yet acted,” Stverak added in a statement. “DCUC believes the NCUA has existing authority under the Federal Credit Union Act and current regulations to evaluate this issue and provide meaningful guidance for federally chartered credit unions.”
Consistent Warning
DCUC said it has consistently warned that the Illinois law could disrupt the payments system and negatively impact fraud prevention, cybersecurity investments, transaction processing, and the affordable financial services relied upon by military families, veterans, and consumers nationwide.
“Today’s decision is an important step forward, but significant questions remain for credit unions,” Stverak added. “DCUC will continue advocating for regulatory clarity, federal consistency, and ultimately full repeal of the Illinois IFPA to help protect consumers and preserve a safe, secure, and reliable payments system.”
