Illinois Swipe Fee Legislation Delayed

Springfield, Illinois – Governor JB Pritzker has signed a bill that pushes back the timeline for banning swipe fees in the state. While banks are celebrating this development, small businesses are expressing growing concerns about what it means for their future.

Whenever a customer swipes their card, retailers get a fraction of the transaction amount, with banks and credit unions taking the larger share. Last year, there was a bipartisan push to eliminate these fees, but banks cautioned that without a proper compliance framework, it could create significant disruptions.

Ashley Sharp, who serves as legislative counsel for the Illinois Credit Union League, mentioned, “We’re talking about a global payment system here. There are international standards involved in card processing, and a lot of different players are involved in a single transaction. Understanding how that process works is crucial to prevent any hiccups.”

The Illinois Retail Merchants Association argues that capping swipe fees would alleviate some financial stress on both consumers and retailers. However, banks and retailers have been engaged in legal disputes regarding the rules governing these fees for much of the past year.

Rob Kerr, president and CEO of IRMA, has expressed frustration that his members will have to endure more delays before the changes take effect.

“These fees often rank as one of the top three costs for retailers,” Kerr pointed out. “Retailers don’t get a choice in this matter. Our proposal was to exclude the sales tax portion since we pay that on behalf of the state, especially now that retail discounts have been reduced.”

A federal judge previously granted a partial interim injunction in December, exempting state banks, federal savings banks, and out-of-state banks from complying with Illinois laws. However, Illinois charter banks and credit unions are still bound by these rules.

Sharp noted that members of the state assembly should carefully reconsider the law. “I appreciate their recognition that there’s a problem here,” she said. “This law needs more in-depth examination, particularly given the ongoing litigation and potential consequences.”

House Bill 742 passed the Senate with a vote of 52-4 and was approved in the House with a 103-9 vote.

Kerr underscored that IRMA is dedicated to preventing any further delays in the implementation of the law. He told Wand News that the organization will continue to push lawmakers to honor their commitment to eliminate swipe fees.