Complaint for Declaratory and Injunctive Relief

Plaintiffs Illinois Bankers Association (“IBA”), American Bankers Association (“ABA”), America’s Credit Unions (“ACU”), and Illinois Credit Union League (“ICUL”), by and through their attorneys, allege as follows:

INTRODUCTION

1. On June 7, 2024, the State of Illinois enacted the Illinois Interchange Fee Prohibition Act, H.B. 4951, Section 150 (“IFPA” or the “Act”). This law, which is scheduled to become effective on July 1, 2025, purports to ban banks, payment card networks, and other entities involved in processing debit or credit card transactions from charging or receiving “interchange fees” in Illinois on the portion of a transaction attributable to taxes or gratuities (the “Interchange Fee Prohibition”). The Act also prohibits banks and others involved in an electronic payment transaction (except the merchant) from transferring or using data from that transaction except to facilitate or process the transaction, or as required by law (the “Data Usage Limitation”). If allowed to become effective, the IFPA would upend the intricate and carefully calibrated global systems for debit and credit card purchases. Plaintiffs’ members include financial institutions from all 50 states, of all shapes and sizes, from small Illinois credit unions to large national banks and payment card networks. The IFPA would massively disrupt the operations of all of them.
2. Interchange fees compensate card-issuing financial institutions (“Issuers” or “Issuing Banks”) for the costs and risks associated with processing credit and debit card transactions. Over 150 billion such transactions are processed per year in the United States alone. 1 Interchange fees are therefore vital to the modern economy. Interchange fees are especially critical to Issuers, as they offset the costs and risks associated with default, fraudulent transactions, customer service, system operations, customer data protection, fund transfers, card processing and production, popular cardholder rewards programs, and other cardholder services, all of which provide tangible benefits to both consumers and merchants.
3. The ability to utilize payment transaction data from credit and debit card transactions is also critical to a multitude of banking functions, such as fraud detection, accounting reconciliation, Know Your Customer and anti-money laundering compliance programs, credit limit determinations, dispute management, card rewards, and cash back processing. 
4. If allowed to take effect, the Act would not only throw well-operating payment card systems into chaos, it would also undermine the significant benefits, safety, and security that payment card systems provide to all participants. But the Act is unlawful. It usurps the federal government’s sole regulatory authority over multiple types of federally chartered financial institutions; and in turn, it runs afoul of multiple provisions of federal and state law designed to ensure that federal and state financial institutions operate on a level playing field and are not treated in a discriminatory manner. The IFPA therefore cannot be enforced against national or state banks, federal or state savings associations or savings banks, federal or state credit unions, card networks, or any other participants in the electronic payment processing ecosystem that are integral to facilitating card transactions. 

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