* Bloomberg…
Federally chartered credit unions will have to comply with an Illinois law banning “swipe fees” on taxes and gratuities, even as litigation seeking to block the law continues.
The Illinois Interchange Fee Prohibition Act doesn’t conflict with the National Credit Union Act, Judge Virginia M. Kendall of the US District Court for the Northern District of Illinois said in a Thursday ruling, denying a preliminary injunction that would’ve allowed national credit unions to avoid following the law while the lawsuit continues.
Click here to read Judge Virginia Kendall’s motion. Last week, Kendall ruled two Illinois merchant trade groups couldn’t join the defense.
* Capitol News Illinois…
Financial institutions argued, and Kendall has so far agreed, that out-of-state banks now subject to the injunction are governed by federal law that can’t be superseded by state action. The injunctions are temporary, however, as the full case plays out.
“This ruling is a positive step forward, ensuring credit card companies and processers that unilaterally dictate swipe fees must comply with this law,” Illinois Retail Merchants Association CEO Rob Karr said in a statement. “By limiting swipe fees that can be charged on the tax and tip portion of transactions, Illinois will provide real relief to consumers and businesses who have long suffered under the opaque swipe fee payment structure.” […]
Leaders of banking organizations said Thursday they will continue to fight the law.
“Today’s ruling illustrates the fundamental flaws of this misguided state law that will inflict chaos on all participants in the Illinois payments system and the customers they serve,” Ben Jackson from the Illinois Bankers Association and Ashley Sharp from the Illinois Credit Union League said in a joint statement. “We will continue our efforts to ensure that all consumers, businesses and financial institutions are spared the mayhem IFPA will trigger.”
The next hearing on the lawsuit is scheduled for March 6.
- H-W - Friday, Feb 7, 25 @ 11:02 am:
Thanks for this explanation, Isabel. I misunderstood the case, and previously attempted to post a comment (Morning Briefing) that was unrelated and off-base.
I really like the work you are doing here to keep us all better informed. Thanks.
- Donnie Elgin - Friday, Feb 7, 25 @ 11:27 am:
=Federally chartered credit unions will have to comply with an Illinois law banning “swipe fees” on taxes and gratuities, even as litigation seeking to block the law continues.=
This will be a big problem for card issues - especially smaller Credit unions - like mine - yes they are part of a larger consortium for CC/debit card services - but they are relatively small and they will be hard-pressed to comply by July 1. Consumers may end up doing more transactions in cash which ironically will hurt retailers/ restaurants as folk are more likely to be price-conscious when paying with cash.
- ChicagoBars - Friday, Feb 7, 25 @ 11:33 am:
Donnie walk me thru how credit card processor calculation changes will drive more consumers to pay with cash. I am agog to know your reasoning because increasingly widespread 3-4% transaction fees certainly aren’t discouraging most consumers from paying by card.
- Cubs in '16 - Friday, Feb 7, 25 @ 11:41 am:
Kudos to ChicagoBars for using the word agog in a sentence.
- Donnie Elgin - Friday, Feb 7, 25 @ 11:54 am:
=Donnie walk me thru how credit card processor calculation changes will drive more consumers to pay with cash=
Because who wants to swipe twice and face higher overall POS fees…
“The upshot is that merchants trying to avoid paying interchange fees on sales taxes may end up asking customers to swipe twice for each purchase…Ashly Sharp of the Illinois Credit Union League pointed out that the measure is asking processors to basically work for free.
If we assume that this bill becomes law, processors who service merchants in Illinois will need to modify their clearing platforms to support this new process,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “It is likely that processors will in turn raise prices on merchants—not just processors, but software companies that provide POS systems for retailers and restaurants”
https://www.paymentsjournal.com/illinois-bill-eliminating-swipe-fees-on-sales-taxes-inches-closer/
- Excitable Boy - Friday, Feb 7, 25 @ 11:59 am:
- The upshot is that merchants trying to avoid paying interchange fees on sales taxes may end up asking customers to swipe twice for each purchase…Ashly Sharp of the Illinois Credit Union League pointed out that the measure is asking processors to basically work for free. -
Only you would swallow such nonsense hook line and sinker.
- Donnie Elgin - Friday, Feb 7, 25 @ 12:08 pm:
= Credit Union League +
Yeah the great big bad Credit unions - grassroots community owned entitles that formed to give the little guy a say against corporatist banks - who would ever believe them-
- Amalia - Friday, Feb 7, 25 @ 12:21 pm:
I believe my credit union when they say that this is bad for us, the members.
- ArchPundit - Friday, Feb 7, 25 @ 12:21 pm:
Appreciate the background Donnie.
- Donnie Elgin - Friday, Feb 7, 25 @ 12:30 pm:
=I believe my credit union=
So do I, I love my credit union and the whole credit union movement. My fees are so much less than Chase or BMO Bank. My comments were meant to be sarcastic.
- Excitable Boy - Friday, Feb 7, 25 @ 1:01 pm:
- who would ever believe them -
If you really think a significant number of businesses are going to start asking people to swipe their card twice I have a bridge to sell you.