Despite legal challenges to the Illinois Interchange Fee Prohibition Act, more than 30 interchange relief bills have been introduced in statehouses this year.

As opponents in the legal battle over the Interchange Fee Prohibition Act prepare their motions for the Seventh Circuit U.S. Court of Appeals, legislators in several other states continue to push bills to regulate the card fees.

Bills the payments industry is following closely have been introduced in Pennsylvania, Massachusetts and New Jersey. Each of the three bills seeks to exempt merchants, like retailers and restaurants, from being charged interchange fees on sales tax, and two of them include an interchange exemption for gratuities.

“I had a liquor store owner tell me that by paying interchange on sales tax, he is getting hit with a fee for collecting sales tax for the state,” New York Assemblyman John T. McDonald III said in an interview last month. McDonald introduced an interchange-relief bill last year and was re-elected to his seat in last week’s election. “Paying interchange on money the state requires merchants to collect on its behalf is unfair,” he said.

What’s drawing attention to the bills in Pennsylvania, Massachusetts and New Jersey is that they could pass before any of the three legislatures adjourns in late 2026 or in early January 2027, not long before oral arguments for the IFPA will be heard late next January by the Seventh Circuit appellate court in Chicago.

“Passing an interchange law before the appeals process in the Seventh Circuit court is settled creates an issue for legislators in other states, because the legal challenge to the IFPA has set a precedent,” Scott Talbott, executive vice president for the Electronic Transactions Association, said last month in an interview.

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