Guard Your Card Illinois: Illinois General Assembly Delays Implementation of Flawed Interchange Fee Prohibition Act

Small Businesses, Local Financial Institutions and Consumers Temporarily Spared From Chaos While Federal Court Challenge Continues to Dismantle This Misguided Policy

SPRINGFIELD, Ill., June 1, 2025 /PRNewswire/ -- The Illinois General Assembly has delayed the implementation of the flawed Interchange Fee Prohibition Act to July 1, 2026, according to Guard Your Card Illinois. This law is currently being challenged in federal court, with a partial preliminary injunction giving protections to federally chartered and national institutions while leaving Illinois banks, credit unions, small business owners and consumers in the path of chaos.

"We thank the Illinois General Assembly, House Speaker Chris Welch and Senate President Don Harmon for extending the effective date of the Interchange Fee Prohibition Act to July 1, 2026," said Ben Jackson, Executive Vice President of the Illinois Bankers Association. "This law will cause widespread economic disruption, and mounting evidence shows that the measure overwhelmingly benefits corporate megastores while placing an undue financial burden on small businesses and smaller financial institutions that form the backbone of our local economies. In the coming months, we will urge the Illinois General Assembly to act in the best interest of their constituents by fully repealing this law."

Last May, an undebated, last-minute provision was included in Illinois' budget package that will establish Illinois as a radical outlier in the global payments system and will upend the way credit and debit cards work across the state. With no workable technology and no system in place as it has never been implemented anywhere in the world, it is unknown how Illinois financial institutions, business owners and consumers will be able to comply with the law. Illinois consumers could be forced to pay tax or gratuity in cash or by check, and purchases might require two transactions.

"Credit unions across Illinois appreciate the General Assembly's recognition of the urgent need for relief from the Interchange Fee Prohibition Act," said Ashley Sharp, Senior Vice President of State Advocacy and Legislative Counsel for the Illinois Credit Union League. "This misguided policy will negatively impact the consumers we serve, and we will continue our efforts to have this law fully repealed."

The Illinois Bankers Association and the Illinois Credit Union League were among a group of plaintiffs who filed litigation to challenge the law last August. A partial preliminary injunction was granted in December, ruling that national banks, federal savings banks and out of state banks would be exempt from complying from the law. However, Illinois' own state-chartered banks, as well as state and federal credit unions, will still have to comply with this law.

"The Community Bankers Association of Illinois appreciates the General Assembly taking the prudent approach of delaying the implementation of the IFPA," said Jerry Peck, Senior Vice President of government relations at the Community Bankers Association of Illinois. "We look forward to continued conversations with lawmakers about the unintended negative consequences this deeply flawed law will have for consumers and small business."

Last October, the Office of the Comptroller of the Currency, which charters and examines national banks, filed an amicus brief stating that the IFPA "is an ill-conceived, highly unusual and largely unworkable state law," and "it is likely that fraud risk would increase significantly, consumer services would be constrained, and public trust would decline."

Small businesses will be left with headaches from this law while corporate megastores will be the beneficiaries. A new study analyzing the cost implications of an Illinois credit card law shows 40 of the largest retailers will soak up nearly 40 percent of the estimated $118 million reduction in interchange. This is why corporate megastores have publicly supported similar legislation in other states.

"The Illinois General Assembly took a step in the right direction by delaying the implementation of the Interchange Fee Prohibition Act, a law that will disrupt a system that has worked efficiently for decades and threaten the economic vitality of small businesses across our state," said Lou Sandoval, President and CEO of the Illinois Chamber of Commerce. "The Illinois Chamber of Commerce urges lawmakers to repeal this law and focus on policies that support small businesses across Illinois."

The Illinois State Black Chamber of Commerce and the Illinois Hispanic Chamber of Commerce have advocated for a repeal of this law due to the harmful impact it will have on small businesses across the state.

"Delaying the implementation of this misguided policy gives small business owners the protections they deserve while the law continues to be challenged in federal court," said Larry Ivory, President and CEO of the Illinois State Black Chamber of Commerce. "We urge Illinois legislators to repeal this law before it harms over one million small businesses across the state."

"We welcome the decision to delay the implementation of IFPA, but it's clear that this law will have serious unintended consequences on small businesses who are the backbone of Illinois' economy," said Jaime di Paulo, President and CEO of the Illinois Hispanic Chamber of Commerce. "If enacted, this law will limit payment options for small retailers, disrupt existing financial systems, and ultimately increase costs for consumers. For Latino-owned businesses, many of which operate with thin margins and limited access to capital, this kind of disruption could be devastating. While the extension is a good start, we still urge the Illinois legislature to repeal this misguided law and prioritize the needs of our local entrepreneurs and communities."

To learn more, visit guardyourcard.com/Illinois.

SOURCE Guard Your Card Illinois