Throughout this campaign, I have been deeply concerned about the increasing burdens placed on our business community and farmers. As our population declines and manufacturing job growth stagnates, Illinois is falling behind. Since 2010—spanning three Democratic governors, one Republican governor, and a state general assembly dominated by Democrats—Illinois manufacturing jobs have grown by only 1%. In stark contrast, neighboring states are experiencing significant job growth: Michigan is up 31%, Kentucky 26%, Indiana 23%, Missouri 18%, Iowa 15%, and Wisconsin 13%. Our business climate is not fostering growth; in fact, it is impeding it.
A prime example of the poor business climate in Illinois is the recently passed Interchange Fee Prohibition Act (IFPA), included in the Illinois omnibus budget bill (HB 4951) and signed into law by Governor JB Pritzker on June 7. Set to take effect in July 2025, this law will prevent credit and debit card issuers from collecting interchange fees on sales, excise taxes, and gratuities if merchants separate these charges from the purchase price.
This legislation, the first of its kind in the nation, is already facing legal challenges. It will require a complete overhaul of banking processes for credit and debit card transactions and compel small businesses to revise their point-of-sale systems. This change will involve significant updates to both software and hardware for banks and businesses, complicating transactions and potentially leading to higher costs for consumers.
The definitions contained within the act make it difficult to determine what compliance ultimately looks like, but there is the potential that to comply, a small family restaurant might have to break down the final cost of a meal into separate categories: the meal itself, state tax, city tax, special tax, and tips.
Please note, that merchants pay fees for credit/debit card transactions to assure that their customers have this payment option. Further, banks would not receive compensation for the convenience that the retailers use for purchases. Therefore, the very banks that created the system to allow for credit/debit transactions that allow patrons this ease of payment, will not be appropriately compensated. It was not too long ago that you had to use cash for simple fast-food purchases. That often meant withdrawing money from the bank or going to an ATM before purchasing your Big Mac. Further, the banks have created sophisticated systems to detect fraud and in the vast majority of cases will reimburse customers who have been defrauded of funds related to credit/debit card payments.
With over 150 billion transactions processed annually in the United States, interchange fees are vital to our modern economy, helping to offset the costs and risks associated with card transactions, again, including fraud and cu
The law’s vague provisions could result in significant fines for businesses, even if they make a good-faith effort to comply, the process ends up being like ‘nailing Jello to a tree’. Other states have reviewed similar regulations but chose not to proceed due to existing federal statutes and banking regulations. This includes provisions in the Dodd-Frank legislation and specific amendments introduced by our own Senator Durbin. This legislation just adds to the pile of regulations that confront small businesses.
These poorly defined and overburdensome regulations impact not only large corporations but also small community banks across central Illinois. If elected in November, I am committed to stopping such detrimental regulations and fostering a more business-friendly environment in our state.
