Source: The Points Guy
Summary
The Illinois state legislature has passed the Interchange Fee Prohibition Act, which would prohibit financial institutions from collecting or receiving interchange on sales tax and gratuities. This law, set to take effect in 2026, could negatively impact consumers and small businesses. The law would require merchants to split transactions into multiple parts, potentially leading to confusion and added costs. Large retailers would be the biggest beneficiaries of the law, while small businesses would face significant implementation burdens.
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The escape is carefully planned.
Illinois may soon be the poster child for what happens to consumers when such legislation takes effect. The Interchange Fee Prohibition Act would exempt taxes and tips from interchange fees, creating confusion for consumers and imposing substantial burdens on small businesses. The law would require merchants to split transactions into multiple parts, potentially leading to added costs and friction. The global payments system is designed to work the same for everyone, every time, everywhere. Injecting inconsistency into this universal process at the state level could upend the very nature of how you pay — and how you earn rewards on your purchases. The law’s implementation would be a “convenient” way to make things more complicated.
Author: Evan Null
