Illinois swipe fee case enters the appeals phase

A major legal battle over credit card swipe fees in Illinois is moving to the appeals phase, and the outcome could change how you process daily transactions. At the heart of the case is the Illinois Interchange Fee Prohibition Act. This law seeks to stop banks and payment processors from charging swipe fees on the portions of a sale that go toward taxes and tips. For a retail or service business, this would mean keeping a larger slice of every transaction, as you currently pay fees on the total amount collected, including the sales tax you remit to the government. However, banking groups successfully blocked the law from taking effect earlier this year, arguing it is unconstitutional and impossible to implement with current technology. The Illinois Attorney General is now fighting to overturn that block. If the state wins, you may eventually see lower processing costs, but you will also face a massive headache regarding your Point of Sale (POS) systems. Most current software isn't designed to split out taxes and tips in real-time for fee calculations. While the law is currently on hold, this appeal means the uncertainty for your 2025 overhead costs will continue. Retailers should keep a close eye on their POS providers to see if they are developing 'split-fee' capabilities in case the law is reinstated.

Source: American Banker — Top News

← Return to the library· Submit a correction