Illinois, your miles and points are at risk

Heyyy (again) 👋 

We know that we typically only send you one email a day, but word on the street is if you’re reading this, you likely live in Illinois.

You all are a special bunch, and you have a special job to do that involves protecting your credit card points and security!

🤔 Here’s some context

As you may or may not already know, the Credit Card Competition Act (CCCA) has created some buzz over the last couple of years about destroying credit card reward programs and reducing general security whenever you swipe your card to make a transaction.

Both the points programs that incentivize consumers to use a card and the security measures that prevent fraud and cyber-attacks are largely funded by interchange (or transaction) fees.

These fees hover around 2% of the total transaction and are covered by the merchant, the payment network (Visa, Mastercard, American Express, etc.), and the issuing bank.

But now, questions surrounding this process have since moved to the state level, and Illinois, you’re at the forefront.

📄 Latest legislation in Illinois

Earlier this year, the Illinois state legislation passed a bill that included a provision to bar credit card companies from collecting interchange (that ~2% fee) on taxes and tips.

At first glance, maybe that seems fair and right. But there are more questions and concerns than answers.

Those who would be most negatively impacted by this change are the merchant (small businesses), and you, the consumer.

Here’s why.

Currently, when you purchase goods or a service, you can do so in one single swipe of your card (duh).

An interchange fee is collected from that swipe, which ultimately funds the safeguards in place to keep that transaction secure from fraud, unauthorized charges, and other risks.

It also supports rewards programs that allow you to earn points from that purchase… The very bread and butter of my (and likely your) travel life 🍞🧈

Several things could happen under this new provision that would bar interchange fees from being collected on taxes and tips:

• Merchants may require two separate card swipes to complete the purchase (one for the service and one for the taxes and fees)

• No collection of interchange fees likely means far less funding for trusted software to protect the transaction of that second swipe

• Small businesses may have to fork over additional funds to upgrade or support their own software to protect themselves (and you)

• Or they continue with opting for a single swipe, but may then have to submit for reimbursement for EVERY transaction on the portion that is barred from collecting interchange fees

😕 The impact

Because this provision was hastily passed, there really aren’t any other details about how this might actually look come July 1, 2025.

In my eyes, there are major inconveniences for the merchant who could be faced with the burden of additional costs to upgrade their security systems or succumb to submitting every single transaction for appropriate reimbursement.

There are also major inconveniences and concerns for us, the consumers and cardholders, who may have to complete several swipes for a single transaction and be at further risk for fraud if that second swipe is, indeed, less secure 😡

Additionally, barring the collection of interchange fees will most likely reduce the funding to support our coveted rewards programs.

You know it’s a serious level of stress if we show you a picture of Ben Affleck going through it. 

So, could we lose out on the ability to earn miles and points from portions of all future transactions? Or for the entire transaction altogether?

Maybe so.

For now, Illinois is the only state to have this take effect, but other states are starting to consider this as well.

The best way you can protect your points and your credit card security is to reach out to your state’s congressional representative.

Sincerely,

The Daily Drop team ❤️