What the Illinois Decision Means for Us
The interchange decision that came out of Illinois last week has stirred up some attention across our national movement. Even though it’s rooted in one state, we know that when a law tests new ground, folks in other states start thinking about how it could show up in their own systems.
If you’re unaware of what happened last week, a federal court in Illinois issued a ruling last week on a law the state passed back in 2024. That law says financial institutions and payment networks can’t collect interchange on the tax or tip portion of a card transaction in Illinois. Basically, it means the way everyday card transactions are handled would have to change, because the system would need to separate out what part of the transaction interchange can be collected on and which portion would need to be excluded from collecting interchange.
Thankfully, the part of the law that would have limited how financial institutions can use payment data — things like monitoring fraud or helping a member sort out a transaction that goes wrong — was not permitted to move forward. But the bigger headline is that the interchange part of the law was allowed to stand, and it’s still scheduled for July 1 unless the appeal or the legislature pushes that date back.
Our General Counsel put together a full breakdown of the court ruling in this week’s Take A Second, so you can check that out for more detail. I’m writing about it here because, while this is happening in Illinois, it’s not just an Illinois issue. A change like this isn’t likely to stay put. And because this is the first case of its kind, there’s no real roadmap for how it might influence conversations among lawmakers, regulators and the payments world more broadly. Not to mention, this will also matter for anyone who travels or shops in Illinois, which will include many of our members. That uncertainty alone is a good reason for us here in Michigan to pay close attention.
Retailers in Wisconsin are already getting antsy and looking to make traction on the recent Illinois ruling. We learned of this from our league friends in that state who are gearing up for battle.
As you can see, what happens in other states can create a trickle, or even a tsunami, of impact. This isn’t something we can ignore or hope won’t make its way to our doorstep. It’s the kind of issue that asks us to stay connected and ready. That’s where our national partners come in. America’s Credit Unions (one of the plaintiffs challenging this law) and the American Association of Credit Union Leagues are keeping a close watch on how this case evolves, staying in touch with the Illinois Credit Union League and the credit unions dealing with it in real time, and helping the rest of us understand what the ruling could mean down the road.
For us in Michigan, that coordination is invaluable. We know how fast an issue can shift from “interesting development” to “something we need to respond to.” Having early insight and a steady line of communication with our national partners helps us think ahead and prepare in a thoughtful, practical way instead of trying to catch up under pressure later.
That’s really the work happening behind the scenes right now. Teams are getting on quick calls, comparing notes, sorting through the legal questions and checking in with partners in other states so we have a better sense of what may be coming our way. And since, like I said, there’s no clear roadmap for how this ruling could influence other states, having that insight early really matters. We know we’re at our best when we stay connected. Being prepared starts well before anything arrives in our legislature. It starts with us talking to each other and keeping that cross‑state communication consistent.
This is one of those times to lean in a little more, stay informed and engaged, and keep tracking how this issue develops so we can adjust quickly if we need to. I would much rather us be ready and thoughtful in how we respond instead of finding ourselves reacting in the moment.
The moral of the story, my readers, is to stay on top of your trade press reading and be ready to roll up your sleeves in Michigan on this issue. Attending our state GAC in Lansing this May is a great way to continue the dialogue with lawmakers on interchange in a very proactive way. And you can rest easy knowing we’ve already been talking and educating lawmakers on this issue for quite some time.
Thanks for reading.
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