CHICAGO—A new study backed by merchant groups shows Illinoisans are in favor of the Interchange Fee Prohibition Act, Eastern Progress reported.
The controversial law is being challenged in a complaint filed by America’s Credit Unions, the Illinois Credit Union League and the American Bankers Association in U.S. District Court for the Northern District of Illinois.
“Eighty-six percent of voters agree that it is unfair for banks and credit card companies to charge businesses swipe fees on the sales taxes they collect for the state of Illinois and units of local government,” said Rob Karr, the president of the Illinois Retail Merchants Association.
Karr said 82% of those polled said that it is unfair to workers and businesses to charge swipe fees on tips, and the notion that a card would have to be swiped twice is not true, Eastern Progress said.
“Think about it, it’s laughable on its face,” said Karr. “When you go to a place that does tips, does your card get swiped twice, no. The server takes it, swipes it, brings it back, then you put in the amount.”
Electronic Payments Coalition
The study by the Electronic Payments Coalition analyzes the cost implications of the Illinois credit card law shows corporate mega-stores will be the largest beneficiaries of the law, which carves tax and tip out of credit card interchange. According to the report, 40 of the largest retailers will soak up nearly 40% of the estimated $118 million reduction in interchange, Eastern Progress said.
Jose Garcia, president of Northwest Community Credit Union in Morton Grove, Ill., in the Eastern Progress report said he is concerned about the costs of this implementation on small businesses.
“I think the small businesses, the mom-and-pop stores, will have to upgrade their equipment and I’m sure that the developers of the technology are not going to do it for free,” said Garcia.
Garcia added that Illinois will be in a vulnerable position to be the “guinea pig” of a new system that has yet to be created.
The complaint filed by ACU and others alleges that Illinois is interfering with the federal government’s exclusive regulatory authority over various federally-chartered financial institutions.