Illinois:
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WHAT’S AT STAKE IN ILLINOIS

The Illinois legislature passed a law—the IFPA—that would completely upend the way your credit and debit cards work – creating confusion for consumers, higher cost for small businesses and the potential for information about your private purchases to be shared. The new law creates a carveout so the tax and tip portion of an overall purchase is exempt from card processing costs known as interchange.

Businesses pay a small percentage of each purchase – approx. 2% – to process your credit and debit card transactions. That fraction is used to safeguard credit card networks, prevent fraud, and fund reward programs.

So why are politicians trying to change the easy, convenient, hassle-free credit and debit card system we rely on every day? Because the largest convenience store chains and corporate mega-stores are trying to pocket more money. But it means small businesses will have to pay for new card processing systems to save on a small fraction of transactions and consumers could have pay taxes and tips in a separate transaction or with cash or check. Worse yet, to ensure your transaction is accurately processed under the new changes, businesses are going to have to share additional information about each and every purchase you make. For tipped workers, it means previously generous customers would possibly be restricted to tipping based on how much cash they are carrying.

This is why no other state in the country or no other country around the world processes credit and debit card transactions this way. In fact, 29 other states have rejected this idea because of the impact and hurdles it would have on commerce across the state – just so the big guys can make more money.

Repeal the IFPA.

Federal Banking Regulator Opposes State Interchange Bills, Calls Illinois Law “Ill-Conceived"

On October 2, 2024, the Office the Comptroller of Currency filed an amicus brief against the Interchange Fee Prohibition Act, set to take effect on July 1, 2025 in Illinois. Below are the highlights of the OCC’s opposition:

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Stop Credit Card Chaos

The IFPA would create chaos for local businesses and shoppers – potentially requiring Illinoisans to pay CASH for sales tax. What do real shoppers think about this untested mandate from Springfield? We found out.

 

 

 

 

Stay Informed

Illinois cannot afford the credit card chaos this experimental bill will cause. Small businesses cannot afford the new costs and cardholders will not tolerate the loss of convenience and privacy these new changes will bring. The current credit and debit card processing system works and provides a valuable service by facilitating efficient purchases, universal acceptance and state-of-the-art protections against fraud and personal identity theft.

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Avoid Credit Card Chaos

This new change would bring about credit card chaos for both consumers and small businesses, here’s why:

Private information about what consumers are purchasing will be required to be shared, eliminating the privacy protections that exist today.
Under the new law, consumers could be forced to pay sales tax in cash or check. Purchases will require two transactions – one for the goods or services and another for taxes and tip. As retailers look to eliminate the hassle of multiple transactions or filing for monthly refunds, some may be forced to require that tax be paid in cash. Customers who have grown accustomed to shopping with only their phone or a single card will also need to start carrying cash.
Smaller merchants will bear the cost burden of complying with the new law, whether through new technology to separate or itemize transactions or time spent every month gathering paperwork to request a refund for interchange. This requires time most small businesses don’t have and is prohibitively complex for retailers selling products with varying tax rates.
Vendors selling online could decide that doing business in the state is not worth the hassle and expense of complying with this radical change to commerce.

Resources

Crain’s: Opinion: Use a Credit or Debit Card? Then You Won’t Like This Deal

Crain’s: Editorial: Who's Robin Hood in This Springfield Scenario?

Chicago Tribune: Editorial: Repeal the Ill-Considered Interchange Fee Prohibition Act and Avoid Credit Card Chaos in Illinois

Group Calls on Governor Pritzker to Veto the Interchange Fee Prohibition Act

Crains: Tucked in Illinois Budget, a Break for Retailers That's Infuriating Airlines and Credit Card Firms

Updates

New Illinois Law Creates Windfall for Largest Corporate Mega-Stores

Study Shows New Illinois Law Will Line the Pockets of the Largest Mega-Stores, Bear Costs on Small Businesses and Consumers

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