With state bans, federal reform proposals and European alternatives progressing, Visa and Mastercard are now dealing with probes from almost every direction.
A federal judge has cleared the way for Illinois’ Interchange Fee Prohibition Act, confirming merchants cannot be charged card swipe fees on sales tax or tips.
The ruling, published on February 10, follows a challenge from banks, who claimed federal law blocked the ban. Judge Virginia Kendall rejected this notion, noting swipe fees are set by Visa and Mastercard, not the banks themselves, calling it “the core snag” in the case.
The decision was welcomed by the Merchants Payments Coalition (MPC), with Doug Kantor, MPC Executive Committee member and general counsel of the National Association of Convenience Stores, providing a statement.
“Merchants provide a service by collecting taxes and tips that are turned over to the state and to employees, and it’s unfair to punish them by charging them price-fixed swipe fees for doing that,” Kantor said.
“These fees drive up prices for consumers at a time when affordability is the key issue facing our nation’s economy. Illinois lawmakers have done the right thing by passing this law and the court has done the right thing by upholding it.”
Richard Hunt, Executive Chairman of the Electronic Payments Coalition, described the law as a “reckless policy” that could destabilise the payments system. He warned it might trigger “credit card chaos” for businesses and consumers if Illinois does not repeal it.
The law is scheduled to take effect on July 1, 2026, though the American Bankers Association, Illinois Bankers Association, America’s Credit Unions and Illinois Credit Union League have confirmed they plan to appeal the ruling.
Payment Expert has approached Visa for comment.
Visa and Mastercard attacked from all angles
One of the first to welcome the Illinois ruling was US Senate Democratic Whip Dick Durbin.
He described the decision as a win for merchants and consumers trying to make ends meet, while “the biggest Wall Street banks, Visa and Mastercard” continue to profit from what he called excessive swipe fees.
Durbin’s position is hardly surprising given he is the lead sponsor of the Credit Card Competition Act (CCCA), a bipartisan proposal which aims to introduce competition and reduce interchange fees.
Visa and Mastercard’s names are repeatedly mentioned in these debates because of the dominance they hold in the global market. The two networks account for roughly 80% of credit card volume, setting interchange rates without any real competition.
Washington and Illinois aren’t the only ones applying pressure on the payments giants either, as other states are now weighing up whether to introduce similar measures of their own.
West Virginia is among those moving in this direction, with House of Delegates member Patrick Lucas being extremely vocal.
He recently published an op-ed titled “West Virginians demand an end to excessive swipe fees,” in which he backed the CCCA and argued merchants should be able to choose between at least two different credit card networks when routing transactions.
According to Lucas, competition would place less pressure on fees while improving service levels, with estimates suggesting the reform could save West Virginia around $76m annually.
The discontent also extends overseas, with European policymakers questioning the region’s reliance on American payment networks.
Europe has responded with the European Payments Initiative (EPI), a consortium of major EU banks established to develop a home-grown alternative. In 2024, EPI launched Wero, a European payment service designed to support account-to-account transfers, digital wallets and card payments.
