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ARTICLE · 25 JUNE 2024

Swipe Fee Showdown: Illinois Passes Novel Payments Law

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Illinois has become the first state to enact restrictions on credit and debit card interchange fees – commonly known as swipe fees – linked to taxes and gratuities.

United StatesTechnology
Thomas V. Panoff
Thomas V. Panoff
Maxwell Earp-Thomas
Maxwell Earp-Thomas
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Illinois has become the first state to enact restrictions on credit and debit card interchange fees – commonly known as swipe fees – linked to taxes and gratuities. The Interchange Fee Prohibition Act (the "Act"), embedded as Section 150-10 of the state's latest revenue bill, signed on June 7 by Governor J.B. Pritzker, aims to accommodate retailers who have long contested the fairness of these fees. The Act forbids card issuers, payment card networks, acquirer banks and payment processors from charging retailers for swipe fees on gratuities and "any use and occupation tax or excise tax" imposed by the State or a local government. The Act will become effective in July 2025.

Although merchants have long advocated for this change, banking and payment industry representatives argue that it imposes an undue hardship by forcing them to process certain components of transactions without compensation. They caution that this could lead to significant operational disruptions

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