CHICAGO—America’s Credit Unions is “cautiously optimistic” following last week’s hearing in the ongoing legal fight over Illinois’ controversial interchange-fee law—a case that could have sweeping implications for how card transactions are handled nationwide.
The U.S. District Court for the Northern District of Illinois heard oral arguments on cross-motions for summary judgment in the challenge to the Illinois Interchange Fee Prohibition Act (IFPA), which would bar financial institutions from charging or receiving interchange fees on the tax or gratuity portion of a transaction.
Representatives from America’s Credit Unions and the Illinois Credit Union League attended the hearing, along with counsel for Illinois banks and the state attorney general’s office.
ACU Argues For Equal Preemption
Ann Petros, vice president, policy engagement and credit union operations for America’s Credit Unions, said the hearing went well for credit unions, noting that Judge Virginia Kendall appeared well-prepared and engaged with the arguments.
“We’re cautiously optimistic,” Petros said. “Judge Kendall indicated she’s been reading up on the case, and we can anticipate a decision before the end of the year.”
Petros explained that ACU argued the same preemption standard that applies to national banks should extend to federal credit unions, since both are federal instrumentalities.
“We believe credit unions deserve the same level of preemption protection,” she said, “and that it should also apply to state-chartered credit unions and banks under the Illinois wildcard statute and to out-of-state banks and credit unions under the Dormant Commerce Clause.”
While retailers attempted to take part in oral arguments—despite an earlier motion to intervene being denied—the court granted them 10 minutes of the attorney general’s allotted time. Petros said the retailers’ points largely repeated their previous filings and that the focus of the hearing remained on the credit union and banking arguments.
Credit Unions, Banks Warn Of Chaos
As CUToday.info reported, both the Illinois League and the Illinois Bankers Association reiterated in court that the IFPA is “bad policy that will create chaos in Illinois every time someone tries to use their credit card.”
“The court has already concluded that national banks deserve relief from the law,” Illinois Credit Union League SVP Ashley Sharp and IBA EVP Ben Jackson said in a joint statement. “Today we were able to show why other players in the payments ecosystem, including Illinois’ community banks and credit unions, deserve the same relief.”
The IFPA, first passed in 2023, is currently delayed until July 1, 2026, after advocacy from the Illinois League and ACU. Credit unions and their allies are seeking a permanent injunction against the measure, which they argue would disrupt card payments, confuse consumers, and undermine federal consistency in financial regulation.
Decision Expected By Year-End
Petros said America’s Credit Unions remains hopeful that Judge Kendall will extend the court’s earlier reasoning—granting relief to national banks and out-of-state banks, and savings associations—to credit unions and other institutions as well.
A favorable ruling would make the preliminary injunction permanent and protect both federally and state-chartered credit unions, Petros noted.