Federal Credit Unions Secure Interchange Victory in Illinois

This week brought a significant advocacy win for federally chartered credit unions. On Sept. 22, the U.S. District Court for the Northern District of Illinois granted a permanent injunction preventing the Illinois Interchange Fee Prohibition Act (IFPA) from applying to federal credit unions.

The ruling protects federal credit unions from the Illinois law, which would prohibit the collection of interchange fees on the tax and gratuity portions of card transactions. While the decision represents an important step in the broader legal challenge to the IFPA, it does not provide the same protection for state-chartered credit unions, raising concerns about unequal treatment and potential complications for the dual-charter system.

The distinction could result in credit unions operating in the same market being subject to different interchange requirements based solely on their charter. Illinois Credit Union League officials have warned that the disparity could lead some state-chartered credit unions to consider whether switching to a federal charter would provide greater regulatory certainty.

America’s Credit Unions and the Illinois Credit Union League are continuing their legal challenge to secure protections for state-chartered credit unions. The case now heads back to the 7th U.S. Circuit Court of Appeals and could potentially reach the U.S. Supreme Court.

The IFPA is scheduled to take effect July 1, 2027, providing additional time for ongoing legal and advocacy efforts.