SPRINGFIELD, Ill.— The Electronic Payments Coalition said it is launching a multimillion-dollar advertising campaign urging Illinois lawmakers to repeal a new law that exempts state and local taxes and tips from credit card swipe fees.
As the CU Daily has been reporting, the Illinois Interchange Fee Prohibition Act (IFPA) is also the subject of litigation in which credit unions are a plaintiff.
The coalition, which represents banks, credit unions and payment networks, said the campaign will target members of the Illinois General Assembly, arguing the law would disrupt payment systems and create unintended costs for financial institutions and consumers.
Industry Pushback
At issue is an Illinois measure that bars credit card processors from charging interchange fees on the portion of transactions tied to taxes and gratuities — a policy supporters say will reduce costs for merchants and consumers.
The Electronic Payments Coalition said the law is unworkable and could force significant changes to how transactions are processed.
“This law injects complexity into every card transaction and risks higher costs across the system,” the group said in announcing the campaign, adding that it is investing millions in advertising, outreach and advocacy to push for repeal.
The coalition warned that separating out taxes and tips from total transaction amounts could require costly system overhauls and create compliance challenges for issuers and payment networks.
What Supporters Say
Backers of the Illinois law, including retail and restaurant groups, have argued the change is needed to address what they view as excessive interchange fees charged on the full purchase amount — including taxes that merchants do not keep.
They say the measure ensures businesses are not paying fees on money that ultimately goes to governments or employees.
Merchant advocates have also said the policy could lower operating costs, particularly for small businesses facing tight margins.
Broader Implications
As the CU Daily has been reporting, the dispute in Illinois is being closely watched nationally, as similar proposals have surfaced in other states and in Congress amid ongoing debates over interchange fees and payment system competition.
Financial institutions, including credit unions, have warned that reducing interchange revenue could affect their ability to offer low-cost financial services, rewards programs and fraud protections.
The Electronic Payments Coalition said its campaign will highlight those concerns and urge lawmakers to reconsider the policy before it takes full effect.
“This is about protecting a payments system that consumers rely on every day,” the group said.
