ABA Asks Seventh Circuit to Block Illinois Interchange Fee Ban Before July 1
Summary
The American Bankers Association and Illinois Bankers Association have asked the Seventh Circuit Court of Appeals to reverse a district court decision and issue an injunction blocking Illinois Interchange Fee Prohibition Act enforcement before the July 1 effective date. The Illinois law bans banks and payment networks from charging or receiving interchange fees on the tax or gratuity portion of card transactions. OCC has filed an interim final rule titled 'National Bank Non-Interest Charges and Fees' related to national banks' authority to charge interchange fees under the National Bank Act.
What changed
The article reports on the ABA's emergency appeal to the Seventh Circuit seeking to prevent Illinois IFPA from taking effect on July 1. The district court previously upheld most of the law, striking down only the data-sharing provision. The OCC and ten former comptrollers have filed separate submissions warning that IFPA threatens the national banking system by interfering with federal regulatory powers. The OCC has also submitted an interim final rule on national bank non-interest charges to OIRA. \n\nBanks, payment networks, and other financial institutions processing card transactions in Illinois face potential operational disruption if the Seventh Circuit denies the injunction request. The case raises preemption questions about whether state interchange restrictions conflict with federal authority over national banks. Compliance teams at affected institutions should monitor the appeal and OCC rulemaking closely.
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- Sponsored Content Archive No Result View All Result No Result View All Result Home Legal # ABA: Illinois interchange law will ‘wreck havoc’ on payment systems
April 17, 2026 Reading Time: 1 min read If enforcement of an Illinois law restricting interchange fees is not prevented before July 1, it will upend the debit- and credit-card operations of federally chartered financial institutions and wreak havoc on the national payment-processing system, the American Bankers Association, Illinois Bankers Association and other plaintiffs told a federal appeals court today.
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. ABA and other groups have challenged the IFPA in federal court. However, earlier this year, a district court judge upheld most of the law, striking down only the portion pertaining to data sharing. The ban on fee collection is currently scheduled to take effect on July 1.
ABA and the other plaintiffs are asking the Seventh Circuit Court of Appeals to reverse the lower court decision and issue an injunction against enforcement of the law. In a new court filing, they warned of “staggering” compliance burdens for banks and other financial institutions if the law is allowed to take effect this summer.
Last month, the Office of the Comptroller of the Currency and a group of 10 former comptrollers warned in separate court filings that the IFPA threatens the national banking system by interfering with federal powers to regulate that system. Also, federal records show that the OCC submitted an interim final rule and a preemption determination on IFPA to the Office of Information and Regulatory Affairs. The interim final rule, titled “National Bank Non-Interest Charges and Fees,” appears to relate to national banks’ authority to charge and receive interchange fees under the National Bank Act, although the rule has not been made public.
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