WASHINGTON—Three Merchants Payments Coalition member associations have asked permission to take part in a lawsuit over Illinois’ new law banning credit card swipe fees on sales taxes and tips, saying merchants’ perspective is needed to understand the high cost the fees impose on small business and their customers, the MPC reported.
The National Retail Federation, Food Industry Association and National Association of Convention Stores, along with the Illinois Retail Merchants Association and the Illinois Fuel and Retail Association, have filed a motion in U.S. District Court in Chicago seeking to intervene in a lawsuit challenging the Interchange Fee Prohibition Act.
As CUToday.info reported, the Illinois Interchange Fee Prohibition Act (IFPA), signed into law on June 7, would ban banks, payment networks and other entities from charging or receiving interchange fees in Illinois on the portion of a debit or credit card transaction attributable to tax or gratuity.
As CUToday.info also reported, the Illinois Attorney General has filed a brief in response to the challenge by America’s Credit Unions, the Illinois Credit Union League, and banking groups against the Illinois Interchange Fee Prohibition Act (IFPA), asserting “sovereign immunity,” among other things.
Law 'Burdensome'
“Banking groups have claimed this law would be burdensome for merchants and difficult to implement, but we can show that simply isn’t true,” NRF Chief Administrative Officer and General Counsel Stephanie Martz said. “Merchants will be directly impacted by the outcome of this case and should be allowed to fully participate. Swipe fees on sales taxes and tips are a huge burden for small businesses and their employees, and ultimately drive up prices for consumers. This landmark law must be upheld.”
“Consumers and small businesses are looking closely at their costs in this economic environment and this work to protect the Illinois law banning swipe fees on taxes and tips could go a long way toward ensuring that people are not forced to pay unnecessary fees to credit card companies in these instances,” Food Industry Association Chief Public Policy Officer Jennifer Hatcher said.
“Visa and Mastercard, not banks, set the prices of swipe fees,” National Association of Convention Stores General Counsel Doug Kantor said. “Federal banking law simply doesn't prevent states from reining in these inflationary, centrally fixed fees. The U.S. credit card industry will still collect the highest fees in the world, even with the Illinois law in place. There is no justification for slowing the Illinois law from taking effect."