CHICAGO—The Illinois General Assembly has passed a one-year delay of the Interchange Fee Prohibition Act (IFPA), a controversial law targeting interchange fees on tax and tip portions of transactions.
The bill now goes to the Governor with a 30-day deadline. The IFPA, which was signed into law on June 7, would ban banks, payment networks and other entities from charging or receiving interchange fees in Illinois on the portion of a debit or credit card transaction attributable to tax or gratuity.
The Defense Credit Union Council applauded the delay, calling for a full repeal.
DCUC warns the IFPA — passed last year without hearings — has already caused legal chaos and financial uncertainty for state-chartered credit unions and small businesses.
“For credit unions, interchange fees are not a profit center — they help fund the essential infrastructure that keeps the payments system secure and functional. These fees support fraud detection, cybersecurity, transaction processing, and the convenience that consumers expect when they use a credit or debit card,” stated DCUC Chief Advocacy Officer Jason Stverak. “When lawmakers interfere with this system, it’s not the big banks or mega-retailers who pay the price — it’s the credit unions and the members they serve.”
Credit unions serve millions of everyday Americans, including military families, veterans and retirees, young students and service members, and small business owners. Many of these communities rely on low- or no-fee checking accounts, affordable credit options, and financial education — all of which would be greatly reduced with interchange legislation such as the IFPA, DCUC said.
“Lawmakers should be very clear-eyed about who this law benefits — and who it harms,’ said Stverak. “This is not about consumer protection; it’s about increasing the profit margins of the largest retailers at the expense of community-based financial institutions.”
Anthony Hernandez, DCUC President/CEO, added, “The IFPA disrupts a secure, reliable payment system and threatens to pass the burden onto consumers through reduced services, fewer protections, and higher costs. We urge the General Assembly to do what’s right and repeal the IFPA in full. And we call on lawmakers nationwide — including all of Congress — to reject harmful interchange mandates that put financial access and security at risk for millions of credit union members across the country.”
ACU Responds
The Illinois CU League and America’s Credit Unions had worked jointly on a supplemental brief for the U.S. District Court here intended to lead to credit unions being included in a preliminary injunction that would pause implementation of the (IFPA). The court granted relief from the law to banks and savings associations in December. America’s Credit Unions, the Illinois Credit Union League, and other organizations filed an additional brief in January explaining why credit unions should also be granted relief.
“We strongly support this delay so that credit unions in Illinois and across the nation can get needed clarity on whether this ill-advised law will impact how they conduct business,” said America’s Credit Unions Chief Advocacy Officer Carrie Hunt. “Thank you to the Illinois Credit Union League and other partners in this endeavor to help the small businesses and consumers who will ultimately suffer if this law goes into effect.”