ICLE Research Cited in Competitive Enterprise Institute Analysis of Illinois Interchange Fee Law
The Competitive Enterprise Institute cited ICLE research in a study examining the compliance costs imposed by the Illinois Interchange Fee Prohibition Act (IFPA). The piece drew on ICLE’s analysis of the operational burdens the law places on financial institutions, payment networks, and processors, organizing those burdens into four compliance categories. The underlying research was conducted by ICLE Senior Scholars Julian Morris and Ben Sperry.
Read the full CEI piece here. Read the ICLE paper here.
This discord introduces significant operational complexity, as financial institutions must distinguish Illinois transactions from all others in real time and adjust authorization, pricing, and routing accordingly. The International Center for Law & Economics (ICLE) sorts these compliance costs into four categories:
- Transaction-data requirements must be expanded so merchants can separately identify and transmit tax and gratuity components at the point of sale.
- Network and issuer-system modifications are required to reprogram authorization and settlement systems to apply Illinois-specific rules within otherwise uniform processing flows.
- Rebate mechanisms may be necessary when tax or tip data are missing or misclassified, which introduces post-transaction adjustments into a system designed for real-time finality.
- Error-handling and dispute processes become more complex as classification mismatches require reconciliation among merchants, issuers, and the network.