In court filings this week, the American Bankers Association and other plaintiffs noted the court has already recognized that an Illinois law restricting certain interchange fees is preempted by federal law, so it should reject the state’s arguments against the court making a summary judgment in the case.
The Illinois Interchange Fee Prohibition Act, or IFPA, bans banks, payment networks and other entities from charging or receiving interchange fees in Illinois on the portion of a debit or credit card transaction attributable to tax or gratuity. Last year, ABA, the Illinois Bankers Association and other groups challenged the law in U.S. District Court for the Northern District of Illinois. Judge Virginia Kendall agreed that federal law likely preempted state law regarding national banks and federal savings associations and issued a preliminary injunction against enforcement for those businesses. The plaintiffs have since asked the court to issue a summary judgment.
The Illinois attorney general’s office has urged the court to reject the request. In response to the state’s arguments, the plaintiffs pointed to the judge’s previous finding on federal preemption. They also noted the court has recognized that federal law entitles out-of-state-chartered banks to parity of treatment with national banks.
The banking system “depends on the existence of parallel state and federal regulatory regimes, on the one hand, and competitive equality, on the other,” the plaintiffs said. “For parallel regulatory regimes to exist, the federal government must retain its primacy as the regulator of federally chartered institutions; preemption precludes states from usurping that role.”
