A federal court has ruled in favor of Illinois Attorney General Kwame Raoul in a case concerning the Illinois Interchange Fee Prohibition Act (IFPA). The U.S. District Court for the Northern District of Illinois Eastern Division upheld the state law, which prevents credit card companies and banks from charging interchange fees on the sales tax and tip portions of electronic transactions. This means merchants will not have to pay processing fees on money collected for the state or passed to employees.
The lawsuit, Illinois Bankers Association, et al. vs Kwame Raoul, challenged whether federal banking law preempted the IFPA. The court determined that since interchange fees are set by card networks rather than banks, enforcing this provision does not interfere with federal banking powers.
The Restaurant Law Center, along with the Illinois Restaurant Association and the Retail Litigation Center, supported the state's position by filing a brief in support of Attorney General Raoul.
Sean Kennedy, executive vice president of Public Affairs at the National Restaurant Association, commented on the decision: “This decision is a meaningful win for Illinois restaurants that have been shouldering rising costs on every transaction. Just as importantly, it lays a clear legal path for other states to follow Illinois’ lead and address credit card processing fees—one of the highest and fastestgrowing costs facing restaurant owners today. This decision shows that state legislatures can take meaningful action to rein in unfair swipe fees to support local businesses.”
The restriction on interchange fees is scheduled to take effect across Illinois starting July 1, 2026.
For more information about how credit card swipe fees impact restaurant operators and what steps are being taken by industry groups to reduce these costs, visit https://restaurant.org/advocacy/issues/swipe-fees/.
