Court Shields Federal Credit Unions From Illinois Swipe Fee Law

A U.S. District Court ruled Tuesday (Sept. 22) that federal credit unions cannot be forced to comply with the Illinois Interchange Fee Prohibition Act (IFPA), according to a Tuesday press release issued by the co-plaintiffs in a lawsuit challenging the law.

The order extended to federal credit unions a permanent injunction that the court previously applied to all federally chartered financial institutions and the payment networks, according to the release.

The plaintiffs in the case include the Illinois Bankers Association, the Illinois Credit Union League, the American Bankers Association and America’s Credit Unions, per the release.

In a joint statement on Tuesday’s ruling, the plaintiffs said: “The order means that only certain state-chartered institutions, and especially those chartered in Illinois, would be forced to comply with the misguided law when it takes effect next July. In light of the court’s actions, state lawmakers should do the responsible thing and finally repeal IFPA in full and spare Illinois consumers and businesses from the payment chaos it would create.”

The IFPA prevents banks and credit card companies from instituting interchange fees, which are otherwise known as “swipe fees,” on the sales tax and tip portions of credit and debit card transactions, PYMNTS reported in April.

The IFPA was signed into law in June 2024 and was soon contested in a lawsuit brought by the four plaintiffs.

The IFPA was initially scheduled to go into effect on July 1, 2025, but it was delayed last year. On June 1, 2025, the Illinois legislature voted to delay the implementation of the interchange fee law until July 1, 2026.

The interchange fee law was delayed again this year, when the Illinois legislature voted June 1 to delay implementation of the IFPA until July 1, 2027.

When the U.S. District Court ruled June 1 that the IFPA cannot be applied to national banks, federal savings associations, payment networks and certain other financial services providers, the plaintiffs said in a joint statement that the ruling was an important step toward preserving a nationwide framework for electronic payments.

“Electronic payments rely on a highly interconnected network that requires a uniform national standard,” the plaintiffs said in the June 1 joint statement.