7th Circuit Sends Interchange Fight Back To Chicago; Law Still Effective July 1

Research evidence excerpt

7th Circuit Sends Interchange Fight Back To Chicago; Law Still Effective July 1

TD Securities (USA) LLC POLICY NOTE

May 11, 2026

■WRG Financial Services 7th Circuit Sends Interchange Fight Back To

Chicago; Law Still Effective July 1

Jaret Seiberg THE TD COWEN INSIGHT

202 868 5313

A federal appeals court sent back to a Chicago judge the banking industry's challenge to

jaret.seiberg@tdsecurities.com

an Illinois law that bars the charging of interchange fees on taxes and tips. This means the

appeals court will not hear oral arguments this week in the case. Instead, the federal judge

must assess how OCC rules preempting the Illinois law impact the case. We expect banks will

win, but downside risk is high.

What Is Happening

There was action Friday in the banking industry's challenge to an Illinois law that bars the

charging of interchange fees on taxes and tips.

■A panel of the U.S. Court of Appeals for the 7th Circuit canceled the scheduled May 13

oral argument in the banking industry's appeal of a federal judge's decision rejecting a

permanent injunction that would have blocked enforcement of the Illinois law against most

banks.

■Instead, it sent the case back to the federal judge in Chicago who declined to issue the

injunction. It instructed that judge to consider the OCC's contention that its interim final

orders preempting the Illinois laws mean the banks are entitled to a permanent injunction

as well as Illinois attorney general's contention that the interim final rules are invalid both

procedurally and substantively.

■The appeals court panel anticipates another appeal regardless of how the district judge

rules. Such an appeal would return to the panel and supplemental briefs would be limited to

issues that had not previously been briefed.

Our View