SPRINGFIELD, IL — A landmark Illinois law that would prohibit banks and credit card companies from charging processing fees on sales taxes and tips has been officially delayed by one year, pushing its implementation date from July 1, 2025, to July 1, 2026.
The delay comes amid mounting pressure and an ongoing legal challenge from banking groups, who argue that the law imposes logistical and technological burdens they cannot meet in time.
Governor J.B. Pritzker, who originally signed the ban into law last year, has acknowledged the delay but noted it was not his initiative.
“This is something I expect will be resolved in the courts over the next year,” Pritzker said Sunday.
What the Law Was Meant to Do
The original measure, embedded in Illinois’ broader revenue bill passed in 2024, aimed to relieve retailers from swipe fees on portions of transactions that include non-product costs like tips and taxes.
- Retailers’ argument: Swipe fees on taxes and tips are unfair and inflate costs for both businesses and consumers.
- Banking industry’s stance: The payment processing systems needed to exclude taxes and tips from fees do not yet exist and would be costly and time-consuming to implement.
Ben Jackson of the Illinois Bankers Association stated:
“The technology doesn’t exist now, nor do we think it will any time soon. Even by 2026, we won’t be ready.”
Who’s Affected and How
If enacted, Illinois would become the first state to require itemized processing fees — a move that supporters say would return millions to local businesses, but that banks call operationally unfeasible.
- Retailers benefit from reduced overhead.
- Banks warn of increased system costs.
- Consumers could face pass-through impacts depending on how businesses adjust.
Tensions Between State and National Policies
This Illinois law is distinct from the federal “Credit Card Competition Act”, introduced by U.S. Senator Dick Durbin, which also targets interchange fee reform but on a national scale.
Legal experts note that while the banking industry lawsuit continues in federal court, a final ruling may not be delivered before the original July 1 deadline.
Rob Karr of the Illinois Retail Merchants Association expressed frustration at the delay:
“It continues to put money in the hands of banks while hurting Illinois families and businesses. Lawmakers need to stand firm against swipe fee greed.”
Do you think banks should be allowed to charge fees on taxes and tips? Should states like Illinois step in to regulate processing fees? Share your thoughts in the comments.
Stay with ChicagoSuburbanFamily.com for updates on Illinois legislation, business policies, and how new rules could affect your bottom line.
