NASHVILLE, Tenn. — A recent federal court ruling in Illinois is drawing attention from retailers and lawmakers in Tennessee, where similar legislation aimed at limiting credit card swipe fees has been under consideration for several years. The Tennessee Grocers & Convenience Store Association (TGCSA) on Monday applauded last week’s ruling by the U.S. District Court for the Northern District of Illinois, Eastern Division, which upheld that state’s Interchange Fee Prohibition Act. Modeled on legislation first introduced in Tennessee in 2020, the Illinois law prohibits payment card companies from charging swipe fees on the sales tax portion of credit card transactions.

TGCSA President & CEO Rob Ikard issued the following statement: “Opponents of Tennessee’s Swipe Fee Fairness movement have tried to block our proposal by raising straw-man arguments about constitutionality and implementation. Now a federal court has confirmed that states can indeed regulate payment card companies. We hope Illinois implements this law on schedule, forcing card company compliance and putting to rest any objections about workability.”

Tennessee retailers collect state and local sales taxes at the point of sale. When customers pay with credit or debit cards, payment card companies assess an interchange — or “swipe” fee — 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.

TGCSA and other business groups have long advocated for prohibiting swipe fees on tax collections, which are not revenue for retailers. “Tennessee’s merchants go to great expense to serve as the state’s most effective tax collectors,” Ikard said. “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.

Banks and payment card companies are expected to appeal the ruling, but the initial victory for Illinois merchants strengthens similar efforts across the country. “We are optimistic that the federal court’s approval of the Illinois law is a step toward adoption in Tennessee and in the more than twenty other states where this legislation has been introduced,” Ikard said.

Tennessee’s “Swipe Fee Fairness Act” (Senate Bill 370 / House Bill 967) is sponsored by Richard Briggs and David Hawk.

While the Illinois ruling focuses on transaction fees tied to tax collections, another tax-related debate is unfolding in Tennessee that directly impacts consumers at the grocery store.

As opposition to card fees continues to take shape nationally, State Representative Mike Sparks of Smyrna, Tennessee, is advancing separate legislation aimed at eliminating sales taxes altogether on fresh fruits and vegetables at both the state and local levels. If the bill passes, both state and local governments would see a slight decline in tax revenue collected by grocery stores. However, the impact would not be too substantial, considering the total amount of tax revenue generated from grocery sales statewide is much higher than most people realize... House Bill 2086, which would eliminate the sales tax on fruits and vegetables, is currently before the House Finance, Ways, and Means Subcommittee.

Meanwhile, the bill to wipe the swipe fee charged by banks and credit card companies at grocery stores in Tennessee was pushed to the Banking & Consumer Affairs Subcommittee last year. So far this year (2026), the bill appears to be stalled. But the recent federal court ruling in Illinois may help to eliminate the card charge in the Volunteer State, perhaps in the near future.