Governor J.B. Pritzker has signed a measure that delays the implementation of Illinois’ Interchange Fee Prohibition Act (IFPA) by one year into law, pushing its effective date to July 1, 2026. The bill aims to provide additional time for legal challenges and industry adjustments before the law takes effect.

The IFPA is the first law of its kind in the United States. It prohibits financial institutions, payment networks, and related entities from charging or receiving interchange fees on the portion of debit or credit card transactions attributable to sales tax or gratuity in Illinois. This means that, once in effect, banks and card networks will not be able to collect fees on taxes and tips paid via card, a move designed to benefit merchants and consumers.

The law was originally set to take effect on July 1, 2025, but credit unions, banks, and small business groups led to a legislative push to delay the implementation by a year. The delay provides time for ongoing litigation and further legislative review, as several banking and credit union organizations have challenged the law in federal court, arguing that it could disrupt payment systems and harm local financial institutions.

Merchants and retailers, who advocated for the original law, argue that the measure will help offset increased costs from changes to sales tax discounts and level the playing field for small businesses.

The Illinois House passed the extension with a 103-9 vote, and the Senate followed with a 52-4 vote.