Court Ruling Could Prevent Credit Card Chaos for Illinois Small Businesses & Consumers

According to federal regulator, if the law is not overturned, Illinois residents would face ‘higher fees, reduced services, and weakened fraud protections’

WASHINGTON, DC – Electronic Payments Coalition Executive Chairman Richard Hunt issued the following statement after the United States District Court for the Northern District of Illinois heard oral arguments in an injunction lawsuit brought against a new state law by the Illinois Bankers Association and Illinois Credit Union League:

“Without this injunction, credit card chaos is coming to Illinois in less than a year,” said EPC Executive Chairman Richard Hunt. “Illinois’ new law impact the way every credit and debit card in the state is processed, making Illinois a global outlier and dangerous experiment with the safe and secure globally-connected payment ecosystem.

“But do not take my word for it, the OCC said this law is ‘ill-conceived, highly unusual and largely unworkable’ and would lead to ‘higher fees, reduced services, and weakened fraud protection.’

“This law clearly does not help consumers and does next to nothing for small businesses. What it does do is add new costs in the form of costly equipment upgrades or increased bookkeeping. The only beneficiaries of this convoluted law are corporate mega-stores who stand to pocket, on average, $2.5 million annually. The largest mega-stores and conglomerates like Amazon, Walmart and Home Depot stand to earn even more. They might say these so-called savings will get passed along to consumers, but we have seen it all before. When Congress capped debit card processing costs, these same mega-stores went back on their promises to lower prices and 99% of merchants either raised prices or kept them the same.

“Plain and simple, this credit card chaos will be a windfall for the largest international corporate mega-stores paid for by consumers and small businesses.”

Note: A new study analyzing the cost implications of an Illinois credit card law shows 40 of the largest retailers will soak up nearly 40 percent of the estimated $118 million reduction in interchange. The top 10 largest retailers – Amazon, Walmart, Home Depot, Verizon, Apple, AT&T, Costco, CVS, Walgreen and Kroger – will receive 21.4 percent of the savings. The remainder of the savings to be split among approximately 1.3 million small businesses in Illinois will be a wash after factoring the operational costs to implement the new system. The Office of the Comptroller of the Currency (OCC) filed an amicus brief earlier this month in support of the Illinois financial trades’ lawsuit and against the new law.