Illinois Interchange Fee Prohibition Act
As part of the Illinois Gives Act, 103-0592, section 150 is the Illinois Interchange Fee Prohibition Act. here is the section below. it takes effect July 1, 2025, although there is a lawsuit against it.
ARTICLE 150. |
Section 150-1. Short title. This Act may be cited as the |
Interchange Fee Prohibition Act. References in this Article to |
"this Act" mean this Article. |
Section 150-5. Definitions. As used in this Act: |
"Acquirer bank" means a member of a payment card network |
that contracts with a merchant for the settlement of |
electronic payment transactions. An acquirer bank may contract |
directly with merchants or indirectly through a processor to |
process electronic payment transactions. |
"Authorization" means the process through which a merchant |
requests approval for an electronic payment transaction from |
the issuer. |
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"Clearance" means the process of transmitting final |
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transaction data from a merchant to an issuer for posting to |
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the cardholder's account and the calculation of fees and |
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charges, including interchange fees, that apply to the issuer |
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and the merchant. |
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"Credit card" means a card, plate, coupon book, or other |
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credit device existing for the purpose of obtaining money, |
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property, labor, or services on credit. |
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"Debit card" means a card or other payment code or device |
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issued or approved for use through a payment card network to |
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debit an asset account, regardless of the purpose for which |
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the account is established, whether authorization is based on |
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a signature, a personal identification number, or other means. |
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"Debit card" includes a general use prepaid card, as defined |
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in 15 U.S.C. 16931-1. "Debit card" does not include paper |
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checks. |
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"Electronic payment transaction" means a transaction in |
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which a person uses a debit card, a credit card, or other |
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payment code or device issued or approved through a payment |
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card network to debit a deposit account or use a line of |
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credit, whether authorization is based on a signature, a |
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personal identification number, or other means. |
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"Gratuity" means a voluntary monetary contribution to an |
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employee from a guest, patron, or customer in connection with |
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services rendered. |
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"Interchange fee" means a fee established, charged, or |
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received by a payment card network for the purpose of |
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compensating the issuer for its involvement in an electronic |
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payment transaction. |
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"Issuer" means a person issuing a debit card or credit |
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card or the issuer's agent. |
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"Merchant" means a person that collects and remits a tax. |
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"Payment card network" means an entity that: |
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(1) directly or through licensed members, processors, |
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or agents, provides the proprietary services, |
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infrastructure, and software to route information and data |
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for the purpose of conducting electronic payment |
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transaction authorization, clearance, and settlement; and |
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(2) a merchant uses to accept as a form of payment a |
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brand of debit card, credit card, or other device that may |
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be used to carry out electronic payment transactions. |
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"Person" means any individual, firm, public or private |
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corporation, government, partnership, association, or any |
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other organization or entity. |
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"Processor" means an entity that facilitates, services, |
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processes, or manages the debit or credit authorization, |
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billing, transfer, payment procedures, or settlement with |
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respect to any electronic payment transaction. |
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"Settlement" means the process of transmitting sales |
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information to the issuing bank for collection and |
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reimbursement of funds to the merchant and calculating and |
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reporting the net transaction amount to the issuer and |
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merchant for an electronic payment transaction that is |
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cleared. |
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"Tax" means any use and occupation tax or excise tax |
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imposed by the State or a unit of local government in the |
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State. |
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"Tax documentation" means documentation sufficient for the |
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payment card network to determine the total amount of the |
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electronic payment transaction and the tax or gratuity amount |
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of the transaction. Tax documentation may be related to a |
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single electronic payment transaction or multiple electronic |
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payment transactions aggregated over a period of time. |
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Examples of tax documentation include, but are not limited to, |
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invoices, receipts, journals, ledgers, and tax returns filed |
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with the Department of Revenue or local taxing authorities. |
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Section 150-10. Interchange fees on taxes prohibited. |
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(a) An issuer, a payment card network, an acquirer bank, |
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or a processor may not receive or charge a merchant any |
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interchange fee on the tax amount or gratuity of an electronic |
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payment transaction if the merchant informs the acquirer bank |
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or its designee of the tax or gratuity amount as part of the |
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authorization or settlement process for the electronic payment |
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transaction. The merchant must transmit the tax or gratuity |
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amount data as part of the authorization or settlement process |
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to avoid being charged interchange fees on the tax or gratuity |
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amount of an electronic payment transaction. |
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(b) A merchant that does not transmit the tax or gratuity |
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amount data in accordance with this Section may submit tax |
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documentation for the electronic payment transaction to the |
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acquirer bank or its designee no later than 180 days after the |
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date of the electronic payment transaction, and, within 30 |
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days after the merchant submits the necessary tax |
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documentation, the issuer must credit to the merchant the |
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amount of interchange fees charged on the tax or gratuity |
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amount of the electronic payment transaction. |
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(c) This Section does not create liability for a payment |
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card network regarding the accuracy of the tax or gratuity |
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data reported by the merchant. |
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(d) It shall be unlawful for an issuer, a payment card |
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network, an acquirer bank, or a processor to alter or |
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manipulate the computation and imposition of interchange fees |
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by increasing the rate or amount of the fees applicable to or |
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imposed upon the portion of a credit or debit card transaction |
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not attributable to taxes or other fees charged to the |
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retailer to circumvent the effect of this Section. |
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Section 150-15. Penalties. |
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(a) An issuer, a payment card network, an acquirer bank, a |
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processor, or other designated entity that has received the |
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tax or gratuity amount data and violates Section 150-10 is |
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subject to a civil penalty of $1,000 per electronic payment |
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transaction, and the issuer must refund the merchant the |
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interchange fee calculated on the tax or gratuity amount |
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relative to the electronic payment transaction. |
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(b) An entity, other than the merchant, involved in |
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facilitating or processing an electronic payment transaction, |
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including, but not limited to, an issuer, a payment card |
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network, an acquirer bank, a processor, or other designated |
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entity, may not distribute, exchange, transfer, disseminate, |
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or use the electronic payment transaction data except to |
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facilitate or process the electronic payment transaction or as |
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required by law. A violation of this subsection constitutes a |
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violation of the Consumer Fraud and Deceptive Business |
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Practices Act. |
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Section 150-95. Severability. The provisions of this Act |
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are severable under Section 1.31 of the Statute on Statutes. |
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