On June 1, the U.S. District Court for the Northern District of Illinois issued a Memorandum Opinion and Order revisiting its February 2026 ruling concerning the Illinois Interchange Fee Prohibition Act (IFPA). The court expanded its prior injunction, concluding that the IFPA’s interchange fee limitation is preempted as applied to certain federally regulated banking entities and payment card networks. Separately, on the same day, the Illinois General Assembly approved a one-year delay of the IFPA as part of a broader amendments package (SB 3645), pushing the law’s effective date from July 1, 2026 to July 1, 2027 for all financial institutions.
The court’s February ruling (previously discussed here) had permanently enjoined the IFPA’s data usage limitation but allowed the interchange fee restriction to take effect, reasoning that payment card networks, rather than banks, establish interchange fee schedules. Following that decision, the OCC issued an interim final rule and interim final order asserting that federal law preempts the IFPA’s interchange fee restrictions (previously discussed here).
Although the court expressed skepticism regarding aspects of the OCC’s actions, it concluded that the OCC’s revised regulation materially changed the preemption analysis.
Specifically, the ruling:
- Expands the court’s preemption analysis. The court concluded that the OCC’s revised regulation clarified national banks’ authority to receive interchange fees through payment networks and other third parties, bringing those activities within federally authorized banking powers.
- Enjoins the interchange fee limitation. The court permanently enjoined Illinois from enforcing the IFPA’s interchange fee limitation against national banks, certain out-of-state state-chartered banks, federal savings associations, and payment card networks.
- Preserves the prior data usage ruling. The court left intact its February determination that the IFPA’s data usage limitation is preempted as applied to a broader group of federally regulated financial institutions and payment system participants.
Putting It Into Practice: The Illinois Interchange Fee Prohibition Act (previously discussed here, here, here and here) remains one of the most closely watched state payment laws in the country. The June 1 decision represents a significant victory for banking industry challengers, and the concurrent legislative delay to July 1, 2027 alleviates immediate compliance pressure for all financial institutions. However, credit unions and Illinois-chartered state banks remain outside the scope of the court’s expanded injunction and should continue preparing for potential compliance obligations. Financial institutions, payment networks, merchants, and other participants in the payments ecosystem should continue monitoring developments in Illinois and other states, as well as any further appellate proceedings, and update compliance and operational planning as necessary.
