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Insights and Expertise

Illinois could learn a hard truth:

Card acceptance is not a right

The economic engine, not a penalty fee
Interchange is not a penalty fee imposed on merchants. It is
the economic engine that funds the entire card ecosystem:
fraud protection; zero-liability coverage for consumers;
credit availability; real-time authorization; cybersecurity;
dispute resolution, that is, chargeback and retrievals; and
guaranteed payment to businesses.
It is also not something that can be selectively removed
from one portion of a transaction while leaving the rest of
the system intact: tap or insert your card, and a merchant
is paid within 24 hours, and now with RTP, even the same
day.

Do you think it's magic that funds are deposited into a
merchant account the next morning? No!

Card transactions do not occur in neat, isolated components
By Steven Peisner the way they appear on a receipt. Sales tax is not always
Acquiring Solutions International Inc. available at authorization. Gratuities are often added
after the original approval. Many small businesses do
or as long as most of us can remember, using a not transmit the enhanced data required to even attempt
credit or debit card has been as routine as turn- the type of calculation this law assumes is simple. Split
ing on a light switch. We used to swipe, but now tenders, incremental authorizations and post-settlement
F we tap, dip, or wave—and the transaction is adjustments are everyday realities.
completed in seconds.
To comply with this law, the entire payments
Gas stations authorize pumps instantly. Restaurants infrastructure—not just in Illinois, but across the country—
close out checks at the end of the night. Patients leave would have to be rebuilt. So this absurd law would cost
medical offices without carrying hundreds of dollars in tens of millions of dollars to design and implement, not
cash. Students pay tuition, commuters tap through transit to mention the possibility that merchants would have to
systems, and families use their credit, debit and EBT cards purchase new equipment.
to buy groceries. Basically, we use our cards almost every
day for almost everything. More complex than 1099-K reporting

That level of convenience did not happen by accident, and We know what that kind of mandate looks like. When
it is not guaranteed; now, imagine it all stopping. the federal government required the creation of the
1099-K reporting system, it took years to implement and
It exists because a highly coordinated, privately funded cost the payments industry millions of dollars in system
system connects financial institutions, card networks, development, testing, certification, merchant onboarding
processors, merchants, fraud-prevention platforms and changes and reporting infrastructure. That was for a
consumer protection frameworks under a single set of uniform federal requirement with clear jurisdiction and a
uniform rules that function the same way in all 50 states defined reporting framework.
and around the world.
Illinois is now attempting to impose something far more
The Illinois Interchange Fee Prohibition Act disrupts that complex without building the system, without funding
foundation in a way that Judge Kendall, legislators and, the system and without authority over the parties that
frankly, much of the public do not yet fully understand. would have to make it work. If the state wants a platform
capable of performing this function, the state will have to
design, build and operate it. Otherwise, the system stops.

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