WASHINGTON--The Defense Credit Union Council has written to the Office of the Comptroller of the Currency regarding its interim final rule and interim final order concerning the Illinois Interchange Fee Prohibition Act (IFPA), expressing support for the OCC’s conclusion that federal law preempts the Illinois statute as applied to institutions supervised by the OCC.
DCUC added that it further supports the OCC’s companion clarification affirming that national banks may charge and receive non-interest compensation, including interchange fees from payment-card activity, even as such fees are set by or in consultation with third parties.
“DCUC applauds the OCC for taking timely and decisive action to preserve the integrity, consistency, and security of the nation’s payments system,” said Anthony Hernandez, DCUC president/CEO, ret. U.S. Air Force colonel. “For credit unions and the communities they serve, maintaining a reliable national payments framework is essential to ensuring uninterrupted financial access, operational certainty, and continued investment in fraud prevention and payments innovation.”
"A national payments system cannot function efficiently if banks, credit unions, merchants, processors, and payment networks are forced to operate under fragmented state-by-state transaction-processing mandates," wrote Jason Stverak, DCUC chief advocacy officer. "The OCC correctly recognized that uniformity is essential to the functioning of modern payment-card systems and that a fractured patchwork of state laws would undermine that uniformity and materially disrupt interstate commerce. That conclusion is especially important for institutions that serve members and customers across state lines and rely on nationally integrated payment networks every day. The Illinois statute itself illustrates the problem."
DCUC noted that Article 150 of 815 ILCS 151 prohibits interchange fees on the tax amount or gratuity of an electronic payment transaction, establishes a manual documentation-and-refund process, imposes civil penalties for violations, and restricts the use of electronic payment transaction data except for transaction processing or as otherwise required by law.
"They reach directly into how payment-card networks price transactions, how banks and related entities process those transactions, and how transaction data may be used for operational and risk-management purposes," wrote Stverak.
DCUC pointed to the OCC’s findings that current payment-card infrastructure does not support the Illinois statute’s automatic processing requirements and that implementation would require substantial technological and operational changes across payment-card networks, financial institutions, and merchants:
"The costs and risks associated with those mandates would be substantial. The OCC estimated that, absent preemption, OCC-supervised banks would face more than $232 million in initial system-upgrade costs, approximately $145 million per year in manual documentation-processing costs for the first several years, and approximately $200 million in lost issuer revenue. The agency also recognized that institutions might have to notify customers and merchants about possible changes to payment-card terms, new software or hardware requirements, and the possibility that some transactions could be declined, creating significant confusion and uncertainty about whether payment cards would continue to work as consumers expect. Those are exactly the kinds of burdens that would ultimately be borne by consumers through reduced services, higher costs, and less reliable payment access."
DCUC also expressed support for the OCC’s conclusion that the Illinois law’s data-use restrictions interfere with federally authorized banking powers and that transaction data is essential for fraud prevention, cybersecurity, risk management, operational efficiency, and consumer services.
"Service members, veterans, and their families depend on a reliable national payments infrastructure, not one that changes from state to state based on conflicting transaction-processing mandates,” wrote Stverak. “For that reason, DCUC supports corresponding action by the National Credit Union Administration to protect federal credit union powers and preserve a uniform national payments framework for credit unions as well. Public reporting on the OCC action also reflected the credit-union industry’s concern that laws like the Illinois statute could jeopardize funding for fraud prevention services, rewards programs, and new payments technology."
DCUC thanked the OCC for acting promptly to provide clarity before the Illinois law’s July 1, 2026, effective date.
"The OCC’s interim final order and companion interim final rule are necessary, well-reasoned, and vital to preserving the integrity of the national banking system and the broader payments ecosystem on which consumers, businesses, and military communities rely every day," said Stverak.