Assistant Minority Leader and State Representative John M. Cabello announced on Apr. 14 the filing of House Bill 5743, which seeks to repeal a new state law set to take effect this summer that would prohibit financial institutions and card networks from charging interchange fees, also known as swipe fees, on the sales tax and tip portions of credit or debit transactions.
The legislation is significant because it addresses concerns about potential confusion and increased costs for small businesses and consumers in Illinois if the current law goes into effect as planned. The measure could impact how businesses process payments at checkout, especially those relying on existing systems not designed to separate taxes and tips from total transaction amounts.
“The last thing Illinois’ small businesses need is a new state law that creates uncertainty and increases their costs,” Cabello said. “At the same time, consumers deserve certainty that they will be able to use a credit or debit card to pay for the sales tax or tipped portion of their bill without unnecessary complications. My bill would prevent the chaos and higher costs that would result from the new state law taking effect this summer if the General Assembly fails to act.”
Credit card companies typically charge between one percent and three percent per transaction in swipe fees, which help fund fraud prevention efforts and rewards programs. The Illinois Interchange Fee Prohibition Act (IFPA), scheduled for implementation on July 1, aims to ban these fees specifically on sales tax or tipped portions of transactions. This has raised questions about whether businesses will need costly new payment systems or processes to comply with the regulation.
An ongoing court case is challenging whether the IFPA can be implemented at all; although a recent ruling favored upholding it, an appeal means its future remains uncertain.
Cabello was elected in 2023 as a Republican representative for Illinois’ 90th House District after replacing Tom Demmer according to Shaw Local News Network.
The Spring Session of the Illinois House continues Tuesday with seven weeks remaining until adjournment scheduled for May 31.
