On February 10, the U.S. District Court for the Northern District of Illinois granted in part and denied in part cross-motions for summary judgment in a challenge to the Illinois Interchange Fee Prohibition Act (IFPA). As previously covered by InfoBytes, the plaintiffs filed a motion for summary judgment in March 2025. Subsequently, in April 2025, the Illinois attorney general filed a cross-motion for summary judgment.
The court held that Illinois may enforce its ban on interchange fees applied to taxes and gratuities in payment card transactions, finding that the statute does not directly conflict with the National Bank Act (NBA), as payment card networks, not banks, set these fees. Specifically, the court held that the NBA does not preempt fees “centrally established by a third-party company,” which in this case is the payment card networks. The court emphasized that, while the IFPA presents complex compliance challenges for financial institutions, the central legal question is whether federal law preempts the state statute; as to this question, the court concluded the NBA does not preempt the IFPA provisions prohibiting interchange fees on sales and local taxes and gratuities.
Additionally, the court granted a permanent injunction against the IFPA’s “Data Usage Limitation” provision as it applies to national banks, federal savings associations, federal credit unions, out-of-state state banks, and payment entities acting on their behalf, concluding that this provision unlawfully restricts federally protected powers to process transaction data. However, the remainder of the law, including the interchange fee ban, remains enforceable and is scheduled to take effect on July 1.
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