In a recent legal development, Illinois has taken the unprecedented step of barring credit card companies from charging swipe fees on retail tips and taxes. The new regulation, part of the Illinois omnibus budget bill (HB 4951), was signed into law by Governor JB Pritzker on June 7, 2024. Under the Interchange Fee Prohibition Act, beginning in July 2025, credit card issuers such as Visa Inc. and Mastercard Inc. will be prohibited from collecting interchange fees on sales and excise taxes and gratuities, provided merchants opt to separate these charges.
This legislative move positions Illinois as the first state to enact such a restriction, but it might not stand unchallenged. The banking sector is expected to litigate against this law to block its implementation. Legal experts anticipate significant hurdles and battles over the constitutionality and economic impact of the regulation.
For a detailed account, refer to Bloomberg Law’s coverage of the unfolding situation.
The outcome of potential legal challenges could have far-reaching implications, not just for Illinois, but for the future of credit card fee regulations across the United States. The ongoing developments will undoubtedly be closely monitored by legal professionals and financial institutions alike.