FOR IMMEDIATE RELEASE
Contact: J. Craig Shearman
(202) 257-3678 craig@shearmancommunications.com
WASHINGTON, Feb. 10, 2026 — The Merchants Payments Coalition welcomed today’s ruling by a federal judge in favor of Illinois’ ban on swipe fees on sales tax and tips.
“This is a major victory for merchants, their customers and their employees,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Merchants provide a service by collecting taxes and tips that are turned over to the state and to employees, and it’s unfair to punish them by charging them price-fixed swipe fees for doing that. These fees drive up prices for consumers at a time when affordability is the key issue facing our nation’s economy. Illinois lawmakers have done the right thing by passing this law and the court has done the right thing by upholding it.”
Kantor’s comments came after U.S. District Judge Virginia Kendall ruled in favor of merchants in a lawsuit brought by banks challenging the Illinois Interchange Fee Prohibition Act, which bans card networks and banks from collecting swipe fees on the tax portion of transactions or on workers’ tips. The law was originally set to take effect in July 2025 but was postponed for one year by the state legislature while the lawsuit was pending.
Kendall rejected banks’ claims that the Illinois law is preempted by the federal National Bank Act. In doing so she addressed the fact that swipe fees are set centrally by Visa and Mastercard regardless of which bank issues a card and called that “the core snag” in banks’ lawsuit.
“The payment card networks built this ecosystem, and the payment card networks set these fees,” Kendall wrote. “To claim that the IFPA interchange fee provision impermissibly interferes with the power set out in (the National Bank Act) — which ‘should be arrived at by each bank on a competitive basis and not on the basis of any agreement’ — does not add up in the face of that reality.”
“The judge has seen clearly that it’s Visa and Mastercard that run the swipe fee system and that states can regulate these anti-competitive fees,” Kantor said.
The ruling comes after attorneys representing the Illinois Retail Merchants Association and three MPC member associations (NACS plus the National Retail Federation and FMI — the Food Industry Association) joined Illinois Attorney General Kwame Raoul in oral arguments last October asking that the swipe fee ban be upheld. Merchants’ attorneys argued that since swipe fees are set by non-banks — Visa and Mastercard — the ban cannot be voided by federal law that preempts state law affecting nationally chartered banks.
The litigation over the Illinois law comes as Congress is considering the Credit Card Competition Act to address swipe fees, which hit a record $187.2 billion in 2024 and drive up prices for the average family by nearly $1,200 a year.
Under the CCCA, banks with at least $100 billion in assets would enable credit cards to be processed over at least one unaffiliated network like Star, NYCE or Shazam in addition to Visa or Mastercard. The measure is expected to result in competition over fees, security and service that would save merchants and their customers over $17 billion a year. Visa and Mastercard, which control 80% of the market, each centrally set the swipe fee rates charged by all banks that issue cards under their brands and also restrict process to their own networks.
About MPC
The Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.
