Illinois swipe fee case enters the appeals phase

• Key insight: Illinois Attorney General Kwame Raoul plans to appeal a federal judge's decision to block enforcement of parts of the Illinois Interchange Fee Prohibition Act against banks and credit unions.
• Forward look: Banking and credit union groups are seeking an expedited appeal, saying a swift resolution would help financial institutions determine whether they must incur potentially steep costs to comply with the law.

WASHINGTON — Banks and credit unions notched a victory earlier this summer against an Illinois law barring swipe fees on taxes and tips — but they can't rest easy just yet. 

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Illinois Attorney General Kwame Raoul last week filed a document that said he intends to appeal the court's previous decision to grant an injunction to bank and credit union groups that exempts them from a law limiting swipe fees on tax-and-tip-portions of transactions. State and national groups representing the industries have fought the law for years, saying that it creates an unworkable situation for them, because the current infrastructure for card purchases can't isolate just an interchange fee on only the taxes or tip of a purchase. 

The Illinois Bankers Association, American Bankers Association and America's Credit Unions and Illinois Credit Union League are involved in the lawsuit against the state. The groups filed a cross-appeal after Raoul's office said it would seek to have the injunction reversed. 

Judge Virginia Kendall of the U.S. District Court for the North District of Illinois in June ruled that federal law preempts part of the state's law, and enjoined enforcement against national banks, federal savings associations covered out-of-state-banks and payment networks. In September, she added credit unions to the list. The court ordered Raoul to submit his brief for the appeal by Nov. 23. 

The industry groups asked for a speedy resolution of the appeal. 

"During the course of this litigation, financial institutions and other 

payment-system participants have faced a shifting landscape as the District 

Court, the Illinois legislature, and relevant federal regulators have taken 

actions affecting the nature and timing of their obligations," according to the industry motion.  "A swift disposition of this appeal will bring needed finality to this dispute and allow affected  financial institutions to determine whether they must indeed incur the  'staggering' costs required for compliance with the IFPA."  

The attorney general's office said it opposes the request for expedited treatment. 

"In these circumstances, there is no reason to expedite supplemental 

briefing, oral argument, or this court's consideration of the issues raised in 

the parties' earlier briefs and any supplemental briefs,"  the attorney general requested, according to a court filing.