Assistant Minority Leader and State Representative John M. Cabello announced on Apr. 14 the filing of House Bill 5743, which seeks to repeal a state law set to take effect this summer that would prohibit financial institutions and card networks from charging interchange fees—also known as swipe fees—on the sales tax and tip portions of credit or debit transactions.
The proposed legislation addresses concerns about increased costs and confusion for both small businesses and consumers in Illinois if the current law is implemented. “The last thing Illinois’ small businesses need is a new state law that creates uncertainty and increases their costs,” Cabello said. “At the same time, consumers deserve certainty that they will be able to use a credit or debit card to pay for the sales tax or tipped portion of their bill without unnecessary complications. My bill would prevent the chaos and higher costs that would result from the new state law taking effect this summer if the General Assembly fails to act.”
Currently, credit card companies charge a fee ranging from 1% to 3% on transactions, which helps fund fraud prevention efforts and rewards programs. The Illinois Interchange Fee Prohibition Act (IFPA), scheduled to go into effect July 1, aims to ban these fees specifically on sales tax or tip amounts within transactions. This could create challenges at checkout for businesses whose payment systems are not designed to separate taxes and tips from total transaction amounts.
There are additional concerns regarding how small businesses might need costly system upgrades or process changes in order to comply with the new requirements if enacted. The impact could also extend to workers who rely on tips as part of their income.
An ongoing court case is currently challenging whether the IFPA will ultimately be implemented; while a recent ruling favored upholding it, an appeal has been filed so its legal status remains unresolved.
Cabello was elected as a Republican representative in 2023 for Illinois’ 90th House District, succeeding Tom Demmer according to public records. The district includes communities such as Rockford, Machesney Park, Freeport, Roscoe, Loves Park, Rockton, South Beloit, Caledonia, Davis, Durand, Rock City, and Rockton.
