WASHINGTON, D.C. – Electronic Payments Coalition Executive Chairman Richard Hunt issued the following statement after a federal court ruling on litigation challenging a flawed state law which changed the way credit and debit cards were processed in Illinois, burdening small businesses and consumers so the largest retailers in the state could pocket additional profits:
“The provisions in this law remain a threat to the safe and secure payment processing system that protects businesses and consumers every day. This reckless policy, which will make Illinois an outlier in the interconnected global payments system, must be fully and swiftly repealed by the Illinois General Assembly before it inflicts credit card chaos on small businesses and consumers across the state.”
Background Information:
The Illinois legislature last year passed a law changing how credit and debit cards are processed in Illinois, creating a carve out for separate portions of a consumer’s transaction. The law made Illinois an outlier in the global economy by separating tax and tip from the overall card transaction. Currently, no system exists to implement such a change.
Small businesses will be left with headaches, while corporate megastores will be the beneficiaries. 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. This is why corporate megastores publicly support the legislation in other states.
Illinois small business advocates like the Illinois Chamber of Commerce, Illinois State Black Chamber of Commerce and Illinois Hispanic Chamber of Commerce all oppose the law. The Office of the Comptroller of the Currency, which charters and examines national banks, filed an amicus brief stating that the IFPA “is an ill-conceived, highly unusual and largely unworkable state law,” and “it is likely that fraud risk would increase significantly, consumer services would be constrained, and public trust would decline.”
