As reported by America’s Credit Unions, the U.S. District Court for the Northern District of Illinois granted a permanent injunction preventing the Illinois Interchange Fee Prohibition Act (IFPA) from applying to federal credit unions.
The decision follows National Credit Union Administration’s (NCUA) June interim final rule concluding that the Federal Credit Union Act preempts the IFPA and similar state laws as applied to federal credit unions.
The case now heads back to the 7th Circuit, and it could potentially escalate as high as the U.S. Supreme Court.
The IFPA, enacted in Illinois in 2024, is scheduled to take effect July 1, 2027, and would prohibit the collection of interchange fees on the tax and gratuity portions of certain credit card transactions. America’s Credit Unions, the Illinois Credit Union League and other organizations challenged the law, arguing that it unlawfully interferes with federal law. The court’s latest decision extends the existing injunction to federal credit unions.
Although the IFPA is an Illinois law, its operational and compliance implications may extend beyond institutions physically located in Illinois. Credit unions whose members conduct debit or credit card transactions in Illinois could experience downstream impacts involving interchange processing, merchant routing practices, vendor system modifications, card network compliance obligations, settlement operations, and other aspects of the payments ecosystem.
While the latest court decision applies specifically to federal credit unions, state-chartered credit unions continue to be subject to the IFPA’s requirements.
We will continue to stay engaged with America’s Credit Unions, the Illinois Credit Union League, and others involved in the matter and remain supportive of efforts to address the issues affecting state-chartered credit unions.
For more information, email Lisa Quaranta.
Your League-member benefits include the Compliance Hotline — providing exclusive access to dedicated compliance experts:
Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!
Additionally, other League-member compliance resources include:
For more information, email Lisa Quaranta.
Powered by ViClarity, a California’s Credit Unions and Nevada’s Credit Unions company.
