EPC Files Amicus Brief Supporting Illinois Banking, Credit Union Trade Lawsuit
WASHINGTON, DC—The Electronic Payments Coalition this week filed an amicus brief with the U.S. District Court of the Northern District of Illinois supporting a lawsuit brought by the Illinois Bankers Association, Illinois Credit Union League, American Bankers Association, and America’s Credit Unions against the merits of a new, experimental Illinois law fundamentally altering the way credit and debit cards are processed in Illinois.
EPC’s amicus supports the plaintiff’s arguments the new Illinois law “is preempted by federal law, which ensures that the national payment system is not subject to a balkanized regulatory regime.” EPC’s brief also states the law “makes [the state of] Illinois a unique and troubling free-rider on the economy-wide benefits of interchange” because “Illinois has effectively awarded itself free access to the interchange system: it collects the full value of the electronic payment system’s benefits while preventing the issuing banks from receiving compensation for the services they add and the risks they assume.”
EPC Executive Chairman Richard Hunt said, “Our modern economy is built on and dependent upon electronic payments. This system, because it is both hassle-free and secure, is often taken for granted. The seamless payment process we all expect was built by private companies, and EPC’s members are invested in protecting its value, innovation, convenience, security, and competition. Readily available electronic credit and debit card purchases have allowed mom-and-pop businesses to compete with the largest corporate mega-stores to reach customers across the country and increase sales. The new law in Illinois puts this system at risk by creating credit card chaos which will predominately fall on the smallest businesses while the largest mega-stores reap any perceived benefit.”
The Illinois state budget included a provision – which has been rejected by more than two dozen other state legislatures – to exempt the tax and tip portion of a transaction from the card processing cost known as interchange. Illinois is currently the only place in the world to have passed a law to process cards in such a manner. Currently, no system exists to facilitate this change and it would potentially require a separate transaction to pay for taxes on a purchase, tips to be left in cash, and merchants to provide itemized purchase records for each consumer’s transaction.
A copy of EPC’s amicus brief is copied below.