TN Grocers Assoc. Applauds Illinois Court Ruling

The Tennessee Grocers & Convenience Store Association is applauding a court ruling in the state of Illinois. Last week, a US District Court in Illinois upheld that state’s Interchange Fee Prohibition Act. That Illinois law prohibits payment card companies from charging swipe fees on the sales tax portion of credit card transactions. The Illinois law is modeled after legislation that was first introduced in Tennessee in 2020.

When you make a purchase at the checkout counter, retailers collect state and local sales taxes at the point of sale. However, if you pay with a credit or debit card, payment card companies assess what’s commonly referred to as a “Swipe fee”. That fee is calculated as a percentage of the total transaction, including the taxes collected on behalf of the state. Roughly 80% of retail sales are made using payment cards, so that adds up to a lot of money in swipe fees that have to be paid by the business.

Tennessee Grocers & Convenience Store Association President & CEO Rob Ikard says business’ paying swipe fees on tax collections is, for those merchants, a tax on a tax.” Tennessee retailers pay more than $300 million each year in swipe fees on tax collections alone. Ikard says he hopes that the Illinois decision will lead to the passing of similar laws that have been introduced in Tennessee and 20 other states.