A renewed debate has emerged in Illinois over a law aimed at banning swipe fees on sales tax and tips in credit card transactions, with significant implications for consumers and businesses alike.
The Illinois Retail Merchants Association (IRMA) asserts that more than 70% of voters in the state support the prohibition of swipe fees on these transactions. In contrast, banks and credit unions strongly oppose the legislation, arguing that it could negatively impact consumers.
The contentious measure, known as the Interchange Fee Prohibition Act, was included in a revenue package passed by Democratic lawmakers in May as part of the Fiscal Year 2025 budget. Retailers have long sought to eliminate these fees, which they view as an unfair burden.
“Credit card companies still charge interchange fees on the purchase price of products and services,” said Rob Karr, President and CEO of IRMA. “Retailers should not have to pay fees on taxes they collect for the state or on tips left for their employees.”
To gauge public opinion, IRMA conducted a poll of 800 voters, revealing that 86% believe it is unjust for banks and credit card companies to impose swipe fees on sales tax, while 82% find it unfair to charge fees on tips.
Gordon Davis, co-founder of Whimsy Tea Company in Springfield, highlighted the financial strain these fees create. “Last year, we paid $5,000 in interchange fees. That amount could mean the difference between a business thriving or failing,” he noted.
Conversely, the Illinois Bankers Association (IBA) criticized the swift passage of the legislation, claiming it was done without adequate input from the financial sector. Ben Jackson, IBA Executive Vice President of Government Relations, expressed concerns that the law favors large retailers over small businesses. He warned that consumers might be forced to pay sales tax using cash or checks rather than credit cards.
“Twenty-nine states have rejected similar measures,” Jackson stated. “Several others are currently studying their impacts on consumers and businesses. This legislation was rushed through without proper research on its consequences for small businesses and consumers in Illinois.”
As both sides prepare for continued discussions, the outcome of this legislative battle will likely have significant ramifications for the state’s retail landscape and its consumers. The conflict underscores the broader national debate surrounding credit card fees and their impact on businesses and shoppers alike.
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