The American Bankers Association and other plaintiffs are asking a federal court to issue a decision by next week in a lawsuit seeking to overturn an Illinois law restricting interchange fees, citing the “drastic actions” banks and other financial institutions would need to consider if the law were to take effect as scheduled.
The 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. ABA and other groups challenged the law in U.S. Federal Court for Northern Illinois, but the court upheld most of the statute in a ruling earlier this year.
However, the Seventh Circuit U.S. Court of Appeals remanded the case back to the lower court after the Office of the Comptroller of the Currency issued an interim final rule and interim final order asserting that federal law preempts the IFPA. The appeals court directed the district court to reconsider its decision in light of the OCC’s actions.
The Illinois law is scheduled to take effect on July 1. The plaintiffs are asking for a decision by June 3 and have petitioned to present oral arguments given the recent regulatory actions affecting the litigation. They previously warned that the IFPA would impose “staggering” compliance burdens on banks and other financial institutions if it were to take effect this summer.
