By KEVIN BESSLER
Illinois Radio Network
SPRINGFIELD, Ill. (IRN) — The debate continues over a controversial credit and debit card law set to go into effect in Illinois in July.
The Interchange Fee Prohibition Act prohibits a credit card holder’s bank from charging or receiving interchange fees on portions of transactions, including taxes and gratuities.
Randy Hultgren, president of the Illinois Bankers Association, said this flawed policy will make Illinois a radical outlier in the global payment system.
“Splitting out elements of what has previously always been considered a single transaction could mean Illinois consumers are forced to pay tax or gratuities in cash or by check, and purchases might require two transactions,” said Randy Hultgren, president of the Illinois Bankers Association at a press conference Wednesday in Springfield. “This has never been implemented anywhere else in the world.”
Supporters of the law, namely the Illinois Retail Merchants Association, argued it will be an easy transition as some laws already prohibit interchange fees on certain purchases.
A lawsuit that was filed against the act resulted in a partial injunction, which protected federally chartered and out-of-state banks from complying. Another court hearing on the law is scheduled for May 7, a fact that doesn’t impress Gov. J.B. Pritzker.
“Most of the time the court cases get thrown out and most of the time those court cases are just because they couldn’t win in the legislature,” said Pritzker Wednesday. “How about they come and win in the legislature and then they can have their way.”
Since its passage last June, the Interchange Fee Prohibition Act has garnered national attention as Illinois is the only state to have passed a law regulating interchange.
Ben Jackson with the Illinois Bankers Association said it takes years to make such a drastic change in the payment system.
“We all have credit cards with chips embedded in them now,” said Jackson. “The onboard for that, getting merchants on board along with financial institutions took 12 to 15 years.”
Eric Cohen, CEO of Merchant Advocate, says the law would be challenging for Illinois businesses, especially the mom-and-pop stores.
“When looking at the intricacies you have to do, I think business owners that understand it would probably say ‘you guys are out of your mind, how do you want us to implement this,’” said Cohen.
