Electronic Payments Coalition (EPC) Executive Chairman Richard Hunt has issued a statement following oral arguments presented by Illinois’ community banks and local credit unions against a new state law. The law would create a carveout for Illinois merchants, residents, and visitors from the current global credit and debit processing system.
“This reckless law threatens every consumer and small business in Illinois with higher costs and fewer fraud protections. It must be struck down in the courts and fully repealed by the General Assembly before unleashing credit card chaos at checkout counters statewide. Today’s court arguments made it undeniably clear: this deeply flawed, experimental law puts the efficiency and benefits of our financial system at serious risk,” Hunt said.
The Office of the Comptroller of the Currency (OCC), a federal regulator responsible for ensuring the safe and sound operation of banks, has criticized the Illinois law. The OCC described it as an “ill-conceived, highly unusual, and largely unworkable state law that threatens to fragment and disrupt this efficient and effective system.” The OCC also stated that the law, which it considers unlawful, would likely lead to “higher fees, reduced services, and weakened fraud protection.”
An EPC study found that the largest national retailers would benefit most from the law, which excludes tax and tip from credit card interchange fees. According to the report, the top 10 largest retailers—including Amazon, Walmart, Home Depot, Verizon, Apple, AT&T, Costco, CVS, Walgreens, and Kroger—would receive 21.4 percent of the savings. The remaining savings would be distributed among about 1.3 million small businesses in Illinois, but these gains would likely be offset by the costs and system upgrades needed to implement the new system.
EPC has stated its support for investing in new technologies and legislating national data security standards to strengthen the payment system.