Venable attorneys Leonard L. Gordon, Megan Barbero, Sean Franzblau, Kyle Keraga, and Michaela Bevan represented the Electronic Transactions Association (ETA) in filing an amicus brief before the Seventh Circuit Court of Appeals, supporting an appeal brought by the Illinois Bankers Association, Illinois Credit Union League, American Bankers Association, and America’s Credit Unions.
The brief supports the reversal of the district court’s refusal to enjoin a provision of the Illinois Interchange Fee Prohibition Act (IFPA) that prohibits credit card issuers from charging interchange "swipe" fees on the portion of a payment attributable to taxes and gratuities. The Illinois Bankers Association and other plaintiffs filed suit in the U.S. District Court for the Northern District of Illinois, arguing that the IFPA is preempted because it "significantly interferes" with the exercise of banking powers granted by the National Bank Act. The court initially agreed and entered a preliminary injunction in December 2024, ruling that federal law likely preempted the IFPA. In its February 10 decision, the court reversed course and held that the interchange fee prohibition does not conflict with federal law because credit card networks, not banks, set interchange fee rates.
As the world's leading coalition for the payments industry, ETA explains in its amicus brief that interchange fees must be coordinated by centralized card networks to function properly. Moreover, interchange fees play a vital role in supporting banks’ efforts to manage transactions, prevent fraud, and offer consumer-friendly credit card rewards. Thus, ETA concludes, interchange fees fall squarely within banks’ federally protected powers, regardless of who initially sets the rates. ETA maintains that the IFPA will wreak havoc on the payment processing system and harm the banks, merchants, and consumers that rely on seamless, instantaneous card payments to facilitate billions of dollars in transactions.