SAN ANSELMO, CALIFORNIA - FEBRUARY 07: In this photo illustration, a credit card is used to pay for gasoline on February 07, 2024 in San Anselmo, California. According to a report by the Federal Reserve Bank of New York, credit card debt in the United States has reached $1.13 trillion. (Photo Illustration by Justin Sullivan/Getty Images)

Getty Images

You tap your card, only to walk out of any business anywhere in the world with one, few, or many market goods. It’s a miracle.

The employees and business owners with whom you transact don’t even know you, but thanks to a credit and debit card payments system that spans the world, what’s in your wallet allows you to exchange the fruits of your labor with other producers anywhere in the world. Which is the point of this opinion piece: it’s easy to forget how simple financial institutions have made it for us to get in return for our production.

It speaks to the overwhelming problem with the Interchange Fee Prohibition Act (IFPA), legislation that Illinois lawmakers passed in 2024 and that is set to go into effect this summer. The IFPA implies that the payments systems politicians and business owners increasingly take for granted are free. What’s troubling is that we should expect politicians to legislate as though what makes life incredibly convenient is costless, but not business owners.

About the legislation, it will shrink the cost of credit and debit card swipe fees paid by businesses that accept credit and debit cards. Rather than paying 2 percent on the total transaction (including tips paid and taxes incurred), businesses will only pay 2 percent on the transaction itself. Translated, businesses want to not just complicate matters for credit card companies, they also want to stiff them.

Let’s start with the complications associated with the IFPA. To implement the legislation, the same credit card companies that vet customers for businesses, track fraud and theft for them, and that commit precious, costly capital so that the vetted customers can exit businesses with market goods in hand, are now expected to engineer two-track transactions for the businesses that accept credit and debit cards. They’re being asked to engineer for those same businesses what will reduce their income from each transaction.

You see, while credit-card companies will still be expected to finance the tips paid by customers to employees of businesses out to shrink credit and debit card profits, along with the sales taxes that credit-card companies will be expected to handle for businesses, those same businesses are seeking and getting from Illinois legislators a legislated freebee from costs associated with the very transactions that keep them in business. That’s because without the tips enjoyed by their employees, they wouldn’t have employees; that or they would have to pay them more.

Which is just a comment that the IFPA legislation is a price control. It’s savings legislated for businesses that will be foisted on the very credit card companies that make it possible for many more businesses to not just exist, but prosper. The obvious problem, and point, is that the costs of financing tips and taxes won’t go away just because legislators decree their disappearance.

Someone will pay them. It could surely be employees reliant on tips to make ends meet, but who will see their tip income decline as hurried buyers don’t bother with the hassles of two-track transactions. The latter means that Illinois businesses themselves could wind up paying much more for the IFPA through increased hourly wages to make up for lost tips. Of course, customers who use credit and debt cards could pay for the legislation too through reduced benefits (cash back, airline miles, etc.) related to using credit and debit cards.

What’s certain is that someone will pay simply because nothing is free, least of all miracles.