Illinois Swipe Fee Law Faces Legal Challenge Over Federal Preemption

A new Illinois law restricting credit card fees on taxes and tips is challenged in court, raising questions about state versus federal banking regulations.

The Illinois Interchange Fee Prohibition Act, set to take effect on July 1, 2025, is being challenged by banking groups seeking an injunction to block its implementation.
The law aims to prevent credit and debit card networks from charging fees on tax and tip portions of transactions, which supporters argue will benefit retailers and consumers.
Opponents, including the Illinois Bankers Association, claim the law is costly, burdensome, and preempted by federal law, citing a recent Supreme Court ruling on banking regulations.
During a federal court hearing, the Illinois attorney general's office defended the law, arguing it does not constitute 'extreme interference' with national banks' operations.
Judge Virginia M. Kendall has yet to rule on the injunction request, as both sides present complex legal arguments regarding the balance of state and federal regulatory authority.