CHICAGO–Credit union representatives were in the courtroom for a hearing here on cross-motions for summary judgment in a challenge to the Illinois Interchange Fee Prohibition Act (IFPA).
The hearing was held by the U.S. District Court for the Northern District of Illinois, with both America’s Credit Unions and the Illinois Credit Union League on hand.
As the CU Daily has reported, the IFPA would prohibit financial institutions from charging or receiving interchange fees in Illinois on the tax or gratuity portion of a card transaction. The law is supported by retailers and opposed by credit unions and financial institutions, which argue it will have negative effects on the card payments system and consumers.
‘Bad Policy’
“Today’s hearing provided us a great opportunity to reiterate our legal arguments demonstrating that IFPA is not only bad policy that will create chaos in Illinois every time someone tries to use their credit card, it’s also clearly pre-empted by federal law,” Illinois Credit Union League Senior Vice President Ashley Sharp and Illinois Bankers Association Executive Vice President Ben Jackson said in a joint statement, according to America’s Credit Unions. “The court has already concluded that national banks deserve relief from the law, and today we were able to show why other players in the payments ecosystem, including Illinois’ community banks and credit unions, deserve the same relief. We remain confident that the law and facts are on our side, and we look forward to the judge’s ruling in this case.”
Sharp, Illinois Credit Union League President/CEO Libby Calderone, and America’s Credit Unions Federal Regulatory Compliance Counsel JaMonika Williams attended hearing.
Retailers Make Argument
According to America’s Credit Unions, retailers attempting to get the law upheld were granted 10 minutes of opening arguments from the Illinois Attorney General’s time. In September, America’s Credit Unions and the league submitted a filing to the court opposing giving the retailers the opportunity to participate in oral arguments, and America’s Credit Unions said retailers’ arguments in the hearing on Wednesday “consisted of points raised in previous legal filings.”
Financial Institutions’ Arguments
The credit union groups and other financial services groups have argued the IFPA is preempted by federal law and allowing it to take effect would lead to chaos and confusion for any consumer, business, and card issuer doing business in Illinois.
After a one-year delay was approved by the court at the request of credit unions and others, the IFPA is now set to be implemented July 1, 2026.
