U.S. Sen. Dick Durbin of Illinois is supporting an Illinois law that will bar the charging of interchange fees on the tax and tip portions of credit and debit card transactions.
Durbin, who is U.S. Senate majority whip and author of the Durbin Amendment, filed an amicus brief in support of the Illinois Interchange Fee Prohibition Act (IFPA), Durbin’s office said in a Monday (Oct. 7) press release.
The IFPA was signed into law June 7 and is being challenged by a lawsuit filed by the Illinois Bankers Association and other organizations, according to the release.
In his amicus brief, Durbin challenged the lawsuit’s claim that the IFPA is preempted by federal law, including the 2010 Durbin Amendment, per the release.
Instead, the IFPA is consistent with the intent of the Durbin Amendment, which sought to reduce “excessive debit interchange fees” and “created a ceiling — not a uniform standard — for debit interchange fees,” the release said.
“In short, the IFPA is both consistent with the Durbin Amendment and consistent with sound policy that will help protect merchants and consumers from excessive and anti-competitive fees,” the amicus brief said.
The legal challenge to the IFPA was filed in August by the Illinois Bankers Association, American Bankers Association, America’s Credit Unions and Illinois Credit Union League, the groups said in an Aug. 16 press release.
In their complaint, the co-plaintiffs argued that if the IFPA takes effect, it will throw the payment system into “chaos” and undermine the benefits provided by credit and debit cards, according to the release.
They also argued that the state law violates several federal statutes and cannot be enforced against a range of banks, savings institutions, credit unions or service providers, per the release.
“While we continue to encourage state lawmakers to reconsider the IFPA, we cannot take the chance that this misguided gift to corporate megastores takes effect and damages our state’s economy,” Illinois Bankers Association President and CEO Randy Hultgren said in the release. “Left unchecked, the IFPA will wreak havoc at the register every time people use their credit or debit card in Illinois, creating confusion for consumers and higher costs for small business and banks in our state.”
In another, separate development around interchange, Visa is facing a lawsuit filed by the U.S. Department of Justice over debit interchange.
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