CHICAGO—The legal fight over the Illinois Interchange Fee Prohibition Act (IFPA) took another turn Friday after the Seventh Circuit Court of Appeals vacated a lower-court decision in the case and sent the matter back to the U.S. District Court for the Northern District of Illinois for further proceedings, effectively resetting a key stage in the battle over the controversial interchange-fee law.
The move comes just days after America’s Credit Unions, the Illinois Credit Union League, the Illinois Bankers Association and the American Bankers Association filed a supplemental brief arguing recent actions by the Office of the Comptroller of the Currency strengthened the case for permanently blocking the law before its July 1 effective date. As CUToday.info recently reported, the OCC issued interim final actions stating national banks and federal savings associations are not subject to the Illinois law, while credit union groups and the Defense Credit Union Council have continued pressing the National Credit Union Administration to provide comparable protections for federal credit unions.
Wednesday’s oral arguments before the Seventh Circuit have now been cancelled as a result of Friday’s order.
America’s Credit Unions, the Illinois Credit Union League, the Illinois Bankers Association and the American Bankers Association issued a joint statement Friday:
“In light of the Seventh Circuit's order, we welcome the opportunity to resume our legal challenge to the Illinois Interchange Fee Prohibition Act in district court. As we have consistently argued, the Illinois Interchange Fee Prohibition Act conflicts with federal law, and recent regulatory actions only reaffirm that fact.
“The Office of the Comptroller of the Currency’s recent interim final actions directly address the core issues in this case and further strengthen our position that IFPA is preempted by federal law. With the law scheduled to take effect in Illinois on July 1, it is critically important for all parties to recognize the need for a timely resolution to provide certainty for consumers, businesses and financial institutions.
“Even better would be for the Illinois legislature to recognize that IFPA was a mistake and repeal this misguided law, sparing Illinois consumers and businesses from payment chaos and confusion.”
DCUC Backs Decision
The Defense Credit Union Council called the decision a "significant and encouraging development" for financial institutions, consumers, and the stability of the nation’s payments system.
“The OCC’s recent actions recognize the serious legal, operational, and economic concerns created by the Illinois law and reinforce the importance of maintaining a consistent national framework for electronic payments," said Jason Stverak, DCUC chief advocacy officer. "DCUC has been actively engaged on the issue since 2024, including formally urging the National Credit Union Administration to oppose the Illinois law and support federal preemption protections for credit unions. Most recently, DCUC sent a detailed letter to NCUA Chairman Kyle Hauptman requesting clarity on the agency’s authority to provide similar regulatory guidance and protections for federal credit unions following the OCC’s interim final rule and order."
Stverak said credit unions should not face uncertainty or unequal treatment simply because their regulator has not yet acted.
“DCUC believes the NCUA has existing authority under the Federal Credit Union Act and current regulations to evaluate this issue and provide meaningful guidance for federally chartered credit unions,” Stverak said. "DCUC has consistently warned that the Illinois law could disrupt the payments system and negatively impact fraud prevention, cybersecurity investments, transaction processing, and the affordable financial services relied upon by military families, veterans, and consumers nationwide. Today’s decision is an important step forward, but significant questions remain for credit unions,” Stverak says. “DCUC will continue advocating for regulatory clarity, federal consistency, and ultimately full repeal of the Illinois IFPA to help protect consumers and preserve a safe, secure, and reliable payments system.”