Here’s Why “Credit Card Chaos” Could Start In Illinois On July 1st

A first-of-its-kind law could start in Illinois this summer.

One of Illinois' latest possible laws to get pushback involves tips on credit cards.

Ads funded by the Electronic Payments Coalition of banks, credit unions and card companies call on Springfield lawmakers to repeal the state's "Interchange Fee Prohibition Act". Under it, credit or debit cards may not work to pay sales tax or tips.

The legislation bans financial institutions from charging a 1-3% "swipe" (interchange) fee on the tax and tips parts of consumer bills. It also bans the institutions from making up the fees elsewhere.

Retailers in Illinois call the ads a scare tactic while the lobbying group in Springfield represents banks, credit unions, credit card communities against the legislation, calling for it to be repealed before July 1st or "credit card chaos" will ensue.

Between the retailers and banks fighting about it, along with lawmakers, it's a really involved situation that's been hung up in Springfield for 2 years now.

If it were to pass some card companies could just stop processing payments in Illinois at all anymore.

They could require 2 swipes: one for the bill and another for the tax and tip.

Those opposed to it say that it could create messes in checkout lines.

Financial institutions have a lot to lose. The law would shave off 10% of the revenue banks and financial institutions get from retailers via the interchange fee, which is a percentage that could get into the hundreds-of-millions.

The argument over whether or not Illinois can institute this law, as the retailers and financial institutions continue arguing, could be going before the U.S. Supreme Court.