Financial institutions seeking to stop Illinois’ novel law banning certain credit card fees notched wins in both the state legislature and federal court on Monday, after a federal judge issued a permanent injunction on the law in question.

The action by Chief Judge Virginia M. Kendall in the Northern District of Illinois followed Illinois lawmakers’ decision in the early hours Monday to, for the second time, delay implementation of the same law. The law on so-called interchange fees, or swipe fees, was aimed at providing financial relief for retailers and has been challenged by banks and their allies since it went into effect two years ago.

Opposing organizations representing both banks and retailers late Monday afternoon indicated the fight over the first-in-the-nation law wasn’t over, though they provided few specific details on next steps in the courts.

Credit card companies and financial institutions currently charge retailers a fee when consumers use cards — based on the total transaction, including goods, taxes and tips. The law bans fees on the tax or tip portions of customers’ bills.

Financial institutions have argued that implementation would be burdensome and costly, affecting not only their industry but potentially also small businesses and consumers.

“This decision is an important step toward preserving a consistent, nationwide framework for electronic payments. At the same time, it does not fully resolve the challenges created by this law,” a joint statement from industry groups challenging the law said, referring to the court’s action.

The court’s block on the law does not appear to apply to credit unions or Illinois-chartered banks, the statement from spokesperson Sarah Grano said. The possibility of applying the law to only some types of institutions has also been a key concern for lawmakers who pushed this session to delay implementation of the law or repeal it.

“We look forward to the 7th Circuit’s review of this misguided law,” the statement said, referring to the U.S Court of Appeals.

The Illinois Retail Merchants Association, a key proponent of the law, is “actively evaluating additional legal avenues,” President and CEO Rob Karr said Monday.

“While today’s ruling is a temporary setback, the judge’s opinion highlights serious procedural and substantive concerns about how the federal rule was adopted and its scope, so this issue is far from settled,” Karr said.

Just a few hours earlier Monday, lawmakers voted to delay implementation of the ban until July 2027 as one of their final actions during the spring legislative session.

The fight between business groups on the fees has spanned from the statehouse and federal courts to media airwaves and Washington since lawmakers and Gov. JB Pritzker enacted the ban.

Back in February, a federal judge ruled that key provisions of the law could go into effect, a decision backed by retailers who supported the legislation. Banks appealed.

Additionally, the federal government in April moved to block the law, a decision that favored financial institutions.

Shortly after, the 7th U.S. Circuit Court of Appeals vacated the previous district judgment in the case and canceled oral arguments, which led to Kendall’s order Monday.

Processing fees average just over 2% per transaction, according to the National Retail Federation.

Retailers say the credit card law will lower costs for businesses and consumers, and that arguments that the change will cause inconvenience are overblown.

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