FOR IMMEDIATE RELEASE
Contact: J. Craig Shearman
(202) 257-3678 craig@shearmancommunications.com
WASHINGTON, June 2, 2026 — The Merchants Payments Coalition today said a federal judge’s ruling against Illinois’ ban on swipe fees on sales tax and tips is not the last word in the case and that the law is expected to eventually be upheld.
“The Illinois decision was based on a technicality and is temporary,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “The OCC wasn’t a party to that case and there hadn’t been a lawsuit filed to challenge the validity of the OCC’s flawed rule. As a result, the court had to accept the OCC rule. Soon, the courts will have the opportunity to invalidate that rule and we are confident they will do so. The OCC has the law wrong on preemption, doesn’t have the power to do what it is trying to do, and violated the Administrative Procedure Act. That rule will be overturned and the Illinois law — and any other state laws on swipe fees — will be able to go into effect.”
The Interchange Fee Prohibition Act was challenged by banks shortly after it was passed, but was upheld in February by a federal judge who rejected their claim that it is preempted by federal banking law. U.S. District Judge Virginia Kendall said the measure is not preempted because swipe fees are set by Visa and Mastercard, which are not banks and therefore not subject to the National Bank Act. Banks appealed the ruling to the 7th U.S. Circuit Court of Appeals, which sent the case back to Kendall last month after the Office of the Comptroller of the Currency issued a rule contending that the National Bank Act preempts the Illinois law and similar measures from applying to nationally chartered banks, and that banks could use rates set by third parties like Visa and Mastercard.
On Monday, Kendall ruled that the law is preempted, citing the OCC rule.
The ruling follows a vote by the Illinois legislature late Sunday night to delay implementation of the Interchange Fee Prohibition Act from July 1 of this year to July 1, 2027. The move was the second time the law, which was passed in 2024 and originally set to take effect July 1, 2025, has been delayed amid heavy lobbying by the card industry. Once legal challenges and settled and it takes effect, the measure will ban credit card and debit card swipe fees from applying to the sales tax and tip portions of transactions, saving Illinois business and their customers over $500 billion a year.
The developments come as Congress is considering the Credit Card Competition Act to address swipe fees overall rather than just those on sales tax and tips. President Donald Trump endorsed the CCCA in January, saying it is needed “to stop the out of control Swipe Fee ripoff.”
Overall credit and debit card swipe fees have increased 80% since the pandemic, reaching a record $198.25 billion last year, including $4.5 billion in Colorado alone. They are most merchants’ highest operating cost after labor and are too much to absorb, driving up prices by more than $1,200 a year for the average family.
Visa and Mastercard — which control 80% of the market — each centrally set the swipe fees charged by banks that issue cards under their brands, and also block transactions from being processed over other networks that could do the job with lower fees and better security. Under the CCCA, banks with at least $100 billion in assets would enable cards they issue to be processed over at least two unaffiliated networks — Visa or Mastercard plus a competitor like NYCE, Star or Shazam. The measure is expected to result in competition over fees, security and service that would save merchants and consumers $17 billion a year.
About MPC
The Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.
