Interchange fee law delay is gaining attention after Illinois lawmakers voted to push the law’s start date to 2026. The decision marks a significant pause in the ongoing battle between retailers and financial institutions over card transaction costs.
The Interchange Fee Prohibition Act (IFPA), originally set to begin on July 1, 2025, will now take effect a year later. Lawmakers passed the measure on Sunday, citing the need for further evaluation. This delay allows more time for both sides of the debate to prepare and potentially revise the legislation.
The law, signed on June 7, 2024, aimed to stop companies from applying interchange fees on tax and tip portions of card payments. However, financial institutions quickly challenged it in court. They argued that federal law already governs such practices and that state laws could create confusion.
Furthermore, industry groups like the American Bankers Association and Illinois Bankers Association praised the delay. They believe the law could disrupt the current payment infrastructure and hurt both businesses and consumers. According to Ben Jackson, Executive Vice President of the Illinois Bankers Association, lawmakers made a smart move by pressing pause.
Meanwhile, supporters of the IFPA are disappointed by the delay. The Illinois Retail Merchants Association stated that it will continue to push for full implementation. It believes the law will benefit retailers by reducing unnecessary transaction costs.
Despite ongoing legal challenges, interchange fee law delay remains a temporary solution rather than a permanent fix. The pending lawsuit from four banking organizations argues that the IFPA conflicts with federal statutes, including the 2010 Durbin Amendment. They claim it could lead to payment system instability and create compliance nightmares.
U.S. Senator Dick Durbin, who authored the Durbin Amendment, filed a legal brief supporting the IFPA. He argued the state law fits within federal intentions to reduce excessive fees.
Looking ahead, the Illinois governor has 60 days to either approve or veto the proposed delay. During this period, lawmakers, advocacy groups, and financial institutions are expected to increase lobbying efforts.
For now, interchange fee law delay gives lawmakers and industries crucial breathing room to sort through complex legal and operational concerns.
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