We are not aware of any limitations under federal or Illinois law on accepting loan payments made with a credit or debit card, but we recommend checking your agreements with the relevant credit and debit card networks regarding this practice.

The publicly available Visa Product and Service Rules prohibit the use of a credit card for debt repayment transactions and impose certain limitations on the use of debit cards, such as prohibiting their use for making payday loan payments in the United States. The Mastercard rules do not appear to impose the same limitations, but they do prohibit the use of Mastercard cards to pay debts that have been “deemed uncollectible” or that arise from the dishonor of a personal check. Additionally, Discover does not publish a public version of their operating agreements. As these rules are revised frequently, we recommend that you check directly with the relevant card network about accepting loan payments made by credit or debit cards.

As for making loan payments with credit or debit cards as POS transactions, we are similarly not aware of any federal or Illinois laws prohibiting the practice. Again, we would recommend checking the relevant credit and debit card network agreements. Further, you should note that card issuing banks often place limits on amounts that can be transferred as POS transactions, which may impact your customers’ abilities to make loan payments.

As for running all loan payments as “card present” even when the relevant card is truly not present, we again recommend reviewing your card network agreements. Because processing fees may be lower for “card present” transactions, the networks may have rules that address the misrepresentation of a transaction as “card present” when that is not the case.

For resources related to our guidance, please see:

• Visa Core Rules and Visa Product and Service Rules, Rule 5.8.12.1, page 443 (October 17, 2020) (“An Acquirer must ensure that a debt repayment Transaction complies with all of the following:

Prohibitions:

• Use of a credit Card or charge Card
   
• Debt that exceeds the statute of limitations and is no longer collectible in a lawsuit, unless the Merchant obtains written Cardholder agreement to the charge and the amount

Restrictions:

• For debt that has been charged-off and transferred from the original owner to a third party, the Merchant must be either: . . .
   
• For payday lending, the Merchant must be . . . Located in the Europe Region. . . .”)

• Mastercard Rules, Rule 5.11.5, page 289 (December 11, 2020) (“In the U.S. Region, the Rule on this subject is replaced with the following: A Merchant must not submit to its Acquirer, and a Customer must not submit to the Interchange System, any Transaction that: 1. Is conducted with a credit Card and represents the refinancing or transfer of an existing Mastercard Cardholder obligation that has been deemed to be uncollectible; or 2. Arises from the dishonor of a Mastercard Cardholder’s personal check.”)