WSJ: The Fees That Fund Your Rewards Credit Card Are Facing a State Battle
An Illinois law set to go into effect this summer would ban credit-card fees on taxes and tips, the latest flashpoint in a battle that could shape the regulation and acceptance of credit cards.
The banks have opposed the Illinois law, warning that some small card issuers could withdraw from the state entirely if it goes into effect as planned on July 1.
The Illinois law could further alter the landscape, splintering acceptance by state, if it takes effect. Already, other states have made similar moves, though federal regulators last week moved to step in and institute national control.
The law was originally signed by the governor in 2024. A collection of trade groups representing banks and credit unions quickly sued, arguing it usurped banks’ rights under federal law. The trade groups are currently appealing in federal circuit courts after a judge upheld the law in February.
If implemented, the new law could turn what has long been a federal fight into a state-by-state affair. There are now 15 similar bills that have been introduced in other legislatures including in Colorado and Delaware.
But the Office of the Comptroller of the Currency put out a new rule last week pre-empting the law and attempting to stop future state legislation governing credit-card fees.
The OCC is trying to step in to prevent a patchwork of state laws, but it seems to be heading to the courts. And this isn't taking to account the proposed merchant settlement with Mastercard and Visa.
WSJ article: The Fees That Fund Your Rewards Credit Card Are Facing a State Battle
byu/URtheoneforme inCreditCards
Posted by URtheoneforme
3 Comments
The idea of mandating that banks transfer payments for taxes and tips free of charge seems nuts. It’s not as if the tax/tip part of a charge is somehow cheaper to handle than the rest – and absurdly it would mean a $100 family purchase from Mcdonalds would pay higher fees than a $100 steakhouse meal for one where $20 of it is tip.
If they have the authority to regulate fees at all, more useful to regulate the overall fee percentage, instead of trying to split the fees for tips and taxes off from the rest.
yeah and the president also said CC interest would be capped at 10% last January soooo
Why tips??? Why does everything in this country need to center around wait staff? Am I the only one who things its weird this one specific type of employee gets every random benefit?