On Tuesday, February 10, 2026, a widely anticipated decision came out of the Northern District Federal Court of Illinois in the litigation challenging the Illinois Interchange Fee Prohibition Act (IFPA). In August of 2024, ICUL joined co-plaintiffs America’s Credit Unions, the Illinois Bankers Association, and the American Bankers Association in challenging the constitutionality of IFPA.
In the decision, Chief Judge Virginia Kendall largely upheld the Interchange Fee Prohibition Act, placing all financial institutions on equal footing. This decision reverses the preliminary injunction previously ordered by the Court, which temporarily protected nationally chartered and out-of-state banks from the law. The Court has now ruled that IFPA’s prohibition on the collection of interchange on tax and gratuity is not preempted by federal law for any institution.
Financial institutions did, however, prevail on the challenge to the data-use limitation. This provision would have barred payment processors, networks, and issuers from using transaction data for anything beyond processing the payment—prohibiting its use for analytics, fraud monitoring, marketing, and other essential member-service functions, with significant penalties for violations. The Court struck this restriction down for both federally chartered and Illinois chartered banks and credit unions. However, the Court did not invalidate the data-use limitation of the IFPA as to out-of-state State-chartered financial institutions beyond those separately exempted under the Riegle–Neal Interstate Banking and Branching Efficiency Act.
In a joint statement, the co-plaintiffs responded to the decision:
“We are deeply disappointed by the ruling and given the July 1 implementation date of the Illinois Interchange Fee Prohibition Act, we will appeal this decision. As the co-plaintiffs demonstrated and the OCC agreed, IFPA is clearly and fully preempted by federal law. The decision not to protect the payment system from this misguided state law is a serious error that will unleash chaos and confusion on Illinois consumers and businesses. We cannot let that stand.”
“In light of this outcome, we renew our call for state lawmakers to repeal this flawed law before it can do any more harm to the Illinois economy. The fight over IFPA and any similar proposal will continue.”
ICUL’s top priority remains advocating for the credit unions, their member-owners, and the communities who will feel the impact of interchange restrictions.
