Nearly two dozen states have recently proposed or are actively carrying forward legislation to regulate or restrict credit card interchange (swipe) fees.
Interchange legislation is not currently being considered in Tennessee or Mississippi, but it is important that we keep a strong pulse on what is happening around us. On Wednesday, June 3, Colorado credit unions received a victory when Governor Polis vetoed the Colorado interchange bill. Learn more from America’s Credit Unions.
However, the battle over the interchange in Illinois continues and has been delayed for a year in a new ruling this week.
Here’s more information from the Illinois Credit Union League to their credit unions. Keep in mind that this will apply to consumer members in Tennessee and Mississippi who do business in Illinois. Hopefully, NCUA will provide clarity on federal preemption that could settle the matter in the coming weeks and months.
We will keep you posted as more developments unfold.
Earlier this week, the U.S. District Court for the Northern District of Illinois issued a new ruling in the ongoing litigation challenging the Illinois Interchange Fee Prohibition Act (IFPA).
The court granted a permanent injunction preventing Illinois from enforcing the law’s interchange fee prohibition against national banks, federal savings associations, certain out-of-state state-chartered banks, and payment card networks. The ruling follows recent actions by the Office of the Comptroller of the Currency (OCC) and modifies portions of the court’s earlier February decision.
Importantly, the court also reaffirmed its prior conclusion that the interchange fee prohibition is not preempted as applied to federal credit unions and other credit unions. As a result, the legal landscape surrounding IFPA remains fragmented, with different financial institutions subject to different legal standards and compliance obligations.
The decision highlights many of the concerns the Illinois Credit Union League has raised since enactment of the law. The court acknowledged that its ruling creates a complicated regulatory framework in which portions of IFPA apply to some institutions but not others, raising significant operational and implementation questions throughout the payments ecosystem.
This ruling underscores the importance of the Illinois General Assembly’s recent passage of SB 3645, which extends implementation of IFPA until July 1, 2027. The extension, secured through Illinois Credit Union League’s advocacy efforts and approved by lawmakers early this morning, provides critical time for ongoing litigation to proceed and for policymakers and stakeholders to continue evaluating the law’s legal, operational and consumer impacts.
Awaiting NCUA to Weigh In
Additionally, we still await NCUA action on preemption, after the Office of Information and Regulatory Affairs posted notice of a pending regulatory proposal. Clarification on preemption by NCUA may impact ongoing litigation efforts from a credit union perspective.
The Illinois Credit Union League will continue to closely monitor developments in both the courts and the legislature and will remain actively engaged in efforts to protect Illinois credit unions and preserve a secure, reliable and efficient electronic payments system for the consumers we serve.
We will provide additional updates as more information becomes available.
