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August 26, 2024 • Issue 24:08:02

Advisory Board
Advisory Board

Navigating the repercussions

of scattered state laws – Part 2

sumers and businesses money, it has faced significant op-
position from the financial industry and Illinois business
groups, as well as critical editorials from the Chicago Tri-
bune and Crain’s Chicago Business.

The plaintiffs argue that the IFPA, if allowed to take effect,
would not only disrupt the efficiency of modern payment
systems but also violate several federal statutes, including
the National Bank Act, the Federal Credit Union Act, and
others. They are seeking a preliminary injunction to pre-
vent the law's implementation while the court examines its
legality.

Legal arguments against IFPA
The ABA and its co-plaintiffs believe the IFPA poses a direct
new law in Illinois slated to take effect in July threat to the longstanding dual banking system established
2025 that prohibits interchange assessments on
sales taxes and gratuities was challenged by by President Lincoln in 1863. This system, which grants the
A bank and credit union groups on Aug. 15, 2024. federal government specific authority over national banks,
is a cornerstone of the U.S. financial system.
In what industry observers have called a bold move to pro-
tect consumers and financial institutions from a disruptive According to Rob Nichols, ABA president and CEO, the
IFPA infringes on federal powers by attempting to regulate
and unconstitutional law, several leading financial orga-
nizations, including the American Bankers Association national banks and credit unions, which are protected by
the National Bank Act and the Federal Credit Union Act.
(ABA), the Illinois Bankers Association, America’s Credit
Unions, and the Illinois Credit Union League, filed a joint The plaintiffs contend that the IFPA is also preempted by
such federal laws as the Home Owners’ Loan Act (HOLA)
complaint in the U.S. District Court for the Northern Dis-
trict of Illinois.

The groups argue that the Illinois Interchange Fee Prohibi- Contributed articles inside by:
tion Act (IFPA) threatens to destabilize the state's payment
system and harm consumers, small businesses and finan- Allen Kopelman .....................................................................................14
cial institutions alike. Vijay Sondhi ............................................................................................18

Signed into law on June 7, 2024, the IFPA prohibits banks, Jim Petit ...................................................................................................26
payment networks, and other entities from charging or re-
ceiving interchange fees on the portion of debit or credit Anthony Walton ....................................................................................28
card transactions that are attributable to tax or gratuity.
While proponents of the law argue that it could save con-
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