John Wittman, Chicago Sun Times Opinion
The national banking system isn’t set up to cater to one state. Chaos will ensue when the law goes into effect July 1, 2025, if it holds up in court. Consumers could end up paying the price.
Established over 150 years ago under President Abraham Lincoln, our national banking system’s uniform regulatory framework has facilitated smooth and efficient financial services nationwide. In a move that will wind back the clock to a pre-Civil War era — and harm Illinois businesses and their customers — Gov. JB Pritzker recently signed into law the Interchange Fee Prohibition Act.
Proponents of the law argue it will eliminate credit card transaction fees on sales taxes and tips, but the reality is much more complicated. The current payments system does not support separating tax and tip from the main transaction. Thus, businesses will be forced to stand up entirely new card-processing systems or adopt cumbersome accounting practices. Costs will almost certainly be passed on to consumers.
A big question remains on whether the payments industry could implement the law, in which case the quick and convenient experience consumers and businesses have today could be a thing of the past. The easy way to pay could be replaced by a clunky, two-or-more-step transaction or require cash. For example, when you swipe your credit card at the gas pump, you may need to swipe again to process the sales tax. For businesses that employ tip earners, such as restaurants, that tip would require a third, separate transaction or cash.
