Illinois state lawmakers this week delayed implementation of its interchange fee law for another year. .The delay was included as part of the Illinois General Assembly’s annual budget approved June 1. Passed in 2024, the Illinois Interchange Fee Prohibition Act bans banks, payment networks and other financial institutions from charging or receiving interchange fees on taxes or gratuity. The law, originally set to take effect July 1, 2025, has been delayed twice amid lawsuits. The American Bankers Association, Illinois Bankers Association, America’s Credit Unions and the Illinois Credit Union League filed a lawsuit against the proposal in August 2024. “This reasonable step will protect Illinois businesses and consumers from facing payment chaos in just a month, without interrupting our ongoing legal challenge to IFPA,” the groups stated after the vote. “We remain confident in the strength of our case and look forward to securing permanent relief from this misguided law."Earlier this week, the U.S. District Court of Chicago ruled federal law preempts the state requirement for national banks, federal savings associations and out-of-state chartered banks and issued a permanent injunction against subjecting the groups to the rule. Court action followed an interim final order from the Office of the Comptroller of the Currency exempting national banks and federal thrifts from the rule. The U.S. District Court for Northern Illinois upheld much of the law earlier this year. In May, the Seventh Circuit U.S. Court of Appeals remanded the case back to the court following the OCC decision.A separate proposal in Colorado would ban collecting interchange fees on sales taxes. The legislation would apply to payment card networks and financial institutions with more than $60 billion in assets. Retailers with at least 500 employees would be required to use the savings to cut prices or increase employee wages and benefits. The bill, which has been approved by the state House and Senate, needs to be signed into law by Democratic Gov. Jared Polis. He has not indicated whether he will sign or reject the measure.
