Oral Arguments Held in Illinois Interchange Fee Case
Credit union officials attend a hearing in a case they hope will stop a new state law.
Representatives from the Illinois Credit Union League, America’s Credit Unions, the American Bankers Association and the Illinois Bankers Association gathered on Wednesday in downtown Chicago for oral arguments inside the U.S. District Court for the Northern District of Illinois in the case challenging the Illinois Interchange Fee Prohibition Act (IFPA).
The four groups filed a lawsuit in August in an attempt to stop the IFPA. In the lawsuit, the groups argued if the IFPA is allowed to go into effect, it “would throw the modern and efficient payment system into chaos and undermine the significant benefits that credit and debit cards provide to consumers and businesses.”
After Wednesday’s hearing, Illinois Credit Union League Vice President, State Advocacy and Legislative Counsel Ashley Neibur Sharp and Ben Jackson with the Illinois Bankers Association released a joint statement.
“As our legal team shared in the hearing, this misguided state law will unleash payment chaos on the people of Illinois unless the court grants us a preliminary injunction barring its implementation. The payment system IFPA calls for barring interchange fees on taxes and tips does not exist anywhere else in the world, and for good reason. It is a bad idea that will create unnecessary mayhem for consumers, businesses and financial institutions of all sizes, while padding the profits of corporate megastores.”
In October, the Office of the Comptroller of the Currency and the Electronic Payments Coalition joined credit unions and banks filing amicus briefs in support of stopping the IFPA.
According to details of the IFPA, the law 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 groups are seeking a preliminary injunction to halt the implementation of the IFPA while the court decides the merits of the case.
According to the lawsuit, the groups argued the IFPA violates multiple statutes including the Federal Credit Union Act and the National Bank Act “and cannot be enforced against national or state-chartered banks, federal or state savings institutions, federal or state-chartered credit unions, nor their service providers.”
According to a statement published by America’s Credit Unions, “A ruling on the preliminary injunction request could be imminent.”