Federal judge keeps in place key parts of Illinois' landmark law banning some credit card swipe fees

Olivia Olander, Chicago Tribune on Feb 10, 2026

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In a decision that banks and credit unions have already said they will appeal, a federal judge on Tuesday ruled key provisions of Illinois’ first-in-the-nation law banning certain credit card fees can go into effect.

Passed in 2024 and set to take effect this July, the law bans certain so-called swipe fees on the tax and tip portions of customers’ bills, with a goal of lowering the amount that credit card companies can charge retailers.

U.S. District Judge Virginia Kendall’s decision stops the implementation of parts of the law governing financial institutions’ use of data. But she sided with the state over banks on a key issue, denying banks’ request for a permanent injunction on the fee prohibition.

The American Bankers Association, Illinois Bankers Association, America’s Credit Unions and Illinois Credit Union League — co-plaintiffs on the case — said they planned to appeal.

“The decision not to protect the payment system from this misguided state law is a serious error that will unleash chaos and confusion on Illinois consumers and businesses. We cannot let that stand,” a statement from the coalition said, reiterating a call for state legislators to repeal the law after the loss in court.

The Democratic-led General Assembly passed the swiping-fee ban nearly two years ago at the behest of retailers who opposed a separate tax hike on their businesses. Both measures were included in that year’s state budget. Retailers say the credit card law will lower costs for businesses and consumers, and that arguments that the change will cause inconvenience are overblown.

“Today’s ruling is a historic win for Main Street over Wall Street,” said Rob Karr, president and CEO of the Illinois Retail Merchants Association. “As the first law in the nation to restrict onerous swipe fees, we hope this measure can serve as a model for other states to seek relief for businesses and working families struggling with higher costs.”

Credit card companies and financial institutions currently charge retailers a fee when consumers use cards, based on the total transaction, including goods, taxes and tips. The law bans fees on the tax or tip portions of customers’ bills. Financial institutions have argued that implementation would be burdensome and costly, affecting not only their industry but potentially also small businesses and consumers.

Amid the litigation, lawmakers last year delayed the ban from taking effect from last July to July 2026.

Drew Hill, deputy press secretary for Attorney General Kwame Raoul, said the office is reviewing the judge’s opinion but declined further comment as “litigation remains pending.”

The law has attracted concern from the financial services sector nationally amid a larger debate between that industry and retailers over federal legislation on swipe fees, also called interchange fees.

Richard Hunt, executive chairman of the Electronic Payments Coalition, a trade association, called for state legislators to repeal the law and said it would “make Illinois an outlier in the interconnected global payments system.”

The Electronic Transactions Association, which said it represents companies including Apple, Amazon, Mastercard, Visa and Chase, also issued a statement from CEO Jodie Kelley saying it was “deeply disappointed by the court’s decision.”

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