WASHINGTON—Credit unions have joined banks and other card issuers in awaiting a judge’s decision on legislation in Illinois that would affect interchange fees.
The decision, which had been expected before year-end 2025 from Judge Virginia Kendall of the Northern District of Illinois, involves the Illinois Interchange Fee Prohibition Act, which prohibits financial institutions from charging interchange, or swipe, fees on the sales tax and tip portions of credit and debit card transactions. The law was signed in 2024 but delayed to take effect July 1, 2026.
The legislation is the subject of a lawsuit filed by the Illinois Credit Union League, America’s Credit Unions, the American Bankers Association and the Illinois Bankers Association.
‘Cautiously Optimistic’
“We remain cautiously optimistic for some relief from compliance with the IFPA and will evaluate the court’s decision when it is released now that Judge Kendall is back from the holiday break,” said Ann Petros, vice president of policy engagement and credit union operations with America’s Credit Unions. “Once we have that decision, we will determine our next steps,” including a possible appeal.
There is also support for legislative efforts in Illinois to roll back the IFPA, Petros said.
Similar bills have been introduced in other state legislatures, as interchange remains a “hot topic,” she said.
“We anticipate a number of interchange bills to be introduced. We know that some have already been pre-filed,” Petros said. “Our teams will carefully review any proposed bills across the states and coordinate with our league partners as necessary. The interchange topic is definitely going to be top of mind.”
No Crystal Ball
Asked when Kendall might rule, Petros said, “I wish I had a crystal ball. We were anticipating it in early December, but she left for break on Dec. 23 and has been out since then. It could be today, later this week, next week or later in January. She had indicated a decision would likely be made by the end of the year, so that may still be true—it may just be a matter of finalizing the opinion. We do know she has put in considerable time evaluating this case.”
Petros said credit unions and banks remain hopeful for a positive decision that provides issuers and card networks relief, ideally through a permanent injunction requiring no compliance with the law.
Such a ruling, she said, would “send a strong signal to legislatures that the IFPA model is not going to work, that preemption is strong for both banks and credit unions, and that they should not pursue similar legislation.”
Petros said she expects more interchange-related activity at the state level regardless of the outcome and estimated that such legislation has been proposed in approximately 30 states. She said bills have already been filed in South Carolina and Vermont, with potential measures under review in Delaware and Mississippi.
