March Madness and the beginning of baseball have exposed a certain type of TV consumer to more commercials than we might otherwise encounter.
It’s not clear if that’s the case with reader DS, from Sycamore, who expressed interest “in learning about the credit card law that advertising on Chicago stations claims may not allow consumers to pay tips and tax on credit cards,” but I salute the spirit of anyone who watches such spots with a cautious eye toward spin.
Capitol News Illinois covered the topic back on Feb. 11 under the headline “In a blow to the banks, pioneering swipe fee law survives first legal challenge; Illinois banks and small business interest groups have already vowed to appeal.”
Maggie Dougherty’s reporting is concise: In late 2024, Illinois enacted the Interchange Fee Prohibition Act – so far, unlike any other state – stipulating banks and credit card processors can’t charge a swipe fee on money paid as a tip or a tax.
“Each time a shopper swipes their credit or debit card, it sets off a complicated network of payments between the consumer’s bank and the retailer’s bank,” Dougherty wrote. “The retailer’s bank pays an ‘interchange fee,’ typically around 2% of the transaction cost, to the consumer’s bank. Those fees paid by retailers are often passed on to consumers. Once IFPA goes into effect, retailers will no longer have to pay those fees on the tip and tax portion of the transaction, theoretically shielding customers from paying for them.”
I shared the CNI story with DS (tinyurl.com/SwipeLaw); her thoughts echoed mine: “The ads that have been running are disingenuous. They state you may not be able to pay tax and tips on your credit card. Businesses and card issuers will figure out how to accommodate this change or risk losing customers.”
Those commercials imply businesses would comply by only allowing electronic payments on the cost of goods (indirectly stating nobody would attempt to go cash-only as a solution). The attempted emotional leverage is that of the restaurant employee who may never get tipped, but remember, taxes are in the same boat. It’s difficult to envision a restaurant, from fast food to fancy steakhouse, that lets customers pay a tab with plastic then fish out physical dollars and cents to cover the tax and tip.
Furthermore, retailers don’t stand to lose out; it’s the banks. There’s a viable argument that this is bad business or an infringement on financial institutions’ profit margins – a stance the Illinois Bankers Association has taken in court – but what’s more likely to tug heartstrings?
As this issue continues to work through the judicial process, it’s always wise to consider who benefits from what outcome and how they tell that story.
• Scott T. Holland writes about state government issues for Shaw Local News Network. He can be reached at sholland@shawmedia.com.
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April 9, 2026 at 10:08AM
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