The Clearing House Association joined the Bank Policy Institute and the Consumer Bankers Association in filing an amicus brief with the U.S. Court of Appeals for the Seventh Circuit in the matter of Illinois Bankers Association, et al v. Kwame Raoul. The case is on appeal from the Illinois federal district court and concerns whether an Illinois law known as the Illinois Interchange Fee Prohibition Act (IFPA) is federally preempted by the National Bank Act and other federal laws. The IFPA prohibits issuers, networks, processors, and acquirer banks from receiving or charging an Illinois merchant any interchange fee on the portion of a transaction attributable to state or local taxes or tips. It would also prohibit the use of payment transaction data for any purpose beyond processing a payment or as otherwise required by law. The Associations previously filed an amicus brief in August 2024 when the case was before the lower court.

The district court held the IFPA does noes not interfere with the core functions of federally-charted banks because it regulates the card networks that charge fees to merchants, rather than the banks. As a result, the court held the IFPA is not preempted by federal law. The Associations’ amicus brief contends that the district court’s holding is wrong because the IFPA interferes with banks’ core function of providing credit and debit cards to customers, which the networks merely facilitate. Further, the Associations contend that the district court’s reasoning would allow states to circumvent preemption by regulating third-parties that facilitate core bank functions. Notably, the Office of the Comptroller of the Currency filed an amicus brief also asserting the IFPA is preempted by federal law. To read the full brief click here.