Federal Court Issues New IFPA Ruling

Yesterday, the U.S. District Court for the Northern District of Illinois issued a significant ruling in the ongoing litigation surrounding the Illinois Interchange Fee Prohibition Act (IFPA), further shaping how the law applies across the financial services industry.

The court granted a permanent injunction blocking IL from enforcing the IFPA’s interchange fee prohibition against national banks, federal savings associations, certain out-of-state state-chartered banks, and payment card networks. The ruling follows recent action by the Office of the Comptroller of the Currency (OCC) and modifies portions of the court’s February decision.

However, the court reaffirmed that the interchange fee prohibition is not preempted for federal credit unions and other credit unions, leaving different categories of financial institutions subject to different legal standards and compliance requirements. The decision also highlights ongoing operational and implementation challenges tied to the IFPA as portions of the law now apply differently across the payments system.

The ruling comes shortly after passage of S.B. 3645, which delays implementation of the IFPA until July 1, 2027, allowing additional time for litigation, regulatory review, and further evaluation of the law’s broader impacts.

Separately, the industry continues to await potential action from the NCUA regarding preemption following notice of a pending regulatory proposal published by the Office of Information and Regulatory Affairs.

Additional legal and regulatory developments are expected as litigation continues.