On June 1, 2026, the Illinois General Assembly passed Senate Bill 3645, moving the effective date of the Interchange Fee Prohibition Act (IFPA) from July 1, 2026 to July 1, 2027. The 2024 law bans interchange fees on the sales tax and tip portions of card transactions. This is the second one-year delay; the law was originally set to start July 1, 2025. The delay awaited Gov. JB Pritzker's signature. The same day, Chief Judge Virginia Kendall of the U.S. District Court in Chicago ruled that the fee limit is permanently enjoined for national banks, federal savings associations, out-of-state state banks and card networks, while Illinois-chartered banks and credit unions remain subject to it.
For businesses selling in Illinois, the practical result is a patchwork. Whether a given transaction would qualify for relief could depend on which institution issued the customer's card. The American Bankers Association estimates about 1.3 million Illinois merchants are affected, plus e-commerce sellers. The OCC has also moved to preempt the law for national banks, and plaintiffs have said they plan to appeal.
If you process cards in Illinois, do not plan budgets around IFPA savings yet. Ask your processor whether it intends to support separating tax and tip amounts in authorization data, how it would handle the split between covered and exempt issuers, and whether there would be any added fees for doing so. Restaurants and other tip-heavy businesses should keep tracking the litigation, since tips are a large share of their card volume.
Merchant groups such as the National Retail Federation have said they will revisit the issue, while payments industry groups continue to push for full repeal.
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