A significant development occurred this week in the legal challenge to the Illinois Interchange Fee Prohibition Act (IFPA). After a federal district court largely upheld the law, America’s Credit Unions, the Illinois Credit Union League, and other plaintiffs filed an appeal with the U.S. Court of Appeals for the Seventh Circuit.
The IFPA would prohibit interchange fees on the portion of card transactions attributable to sales taxes and gratuities. Plaintiffs argue the law is unworkable, conflicts with federal payments law, and would create significant compliance challenges for card issuers, including credit unions.
The appeal seeks to block enforcement of the law while litigation continues and asks the court to ultimately strike it down.
Why This Matters to Louisiana Credit Unions
Although the law is specific to Illinois, its impact would not stop at state borders.
- If a Louisiana credit union member uses their card at a merchant in Illinois, the transaction could be subject to Illinois’ interchange restrictions.
- Compliance would largely fall on issuers and payment networks, potentially increasing operational costs and complexity for credit unions nationwide.
- If the law is allowed to stand, it could encourage similar legislation in other states, including during future Louisiana legislative sessions.
For Louisiana credit unions, the IFPA appeal is being closely watched as a precedent-setting case that could affect interchange revenue, card program sustainability, and member services well beyond Illinois.
Luminate is monitoring the appeal in coordination with America’s Credit Unions and league partners nationwide. While this litigation represents a critical line of defense, credit unions should expect continued interchange-related policy activity at both the state and federal levels.
Additional guidance will be shared as the case progresses.