WASHINGTON— The Office of the Comptroller of the Currency has now formally advanced two interim final actions aimed at shielding national banks from Illinois’ Interchange Fee Prohibition Act, escalating the federal fight over the state’s controversial swipe-fee law and intensifying pressure on NCUA to determine quickly whether it will provide similar protection for federal credit unions ahead of the law’s July 1 effective date.
As CUToday.info previously reported, the OMB’s regulatory review site shows the OCC submitted both an “Order Preempting the Illinois Interchange Fee Prohibition Act” and an interim final rule titled “National Bank Non-Interest Charges and Fees” on April 14.
The dual OCC filings confirm what had previously been signaled in regulatory disclosures and reported by Bloomberg Law: that the agency is pursuing both a direct preemption determination and a parallel rulemaking track to reinforce national banks’ authority to charge and receive interchange fees despite Illinois’ law, which bars fees on the tax and gratuity portions of card transactions.
The IFPA remains under expedited review at the Seventh Circuit after a federal district court largely upheld the interchange-fee restriction while blocking only the law’s data-usage limits, leaving credit unions and other institutions still exposed absent further court or regulatory relief.
The move is likely to sharpen the spotlight on NCUA, which CUToday.info previously reported is expected to pursue its own response after both America’s Credit Unions and the Defense Credit Union Council publicly argued the agency has authority under the Federal Credit Union Act to preempt state laws that “significantly interfere” with federal credit unions’ powers. ACU has said NCUA should match the OCC’s approach, while DCUC has urged Chairman Kyle Hauptman to act swiftly so credit unions are not left at a competitive disadvantage while banks receive regulatory cover.
If NCUA does not act—and the courts do not intervene—credit unions could remain in the position of facing operational and compliance uncertainty in Illinois even as national banks gain a clearer federal shield. CUToday.info has reached out to NCUA, but the agency has declined comment.
CU Trades' Provide Perspectives
Defense Credit Union Council Chief Advocacy Officer Jason Stverak said the OCC’s actions Friday reinforce an issue that DCUC has “consistently” raised: that a fragmented, state-by-state mandates risk creating an unworkable and inconsistent payments system.
“As we outlined in our April 16 letter to the National Credit Union Administration, DCUC has already urged the agency to determine whether it has comparable authority to the OCC and, if so, to act swiftly to reduce regulatory uncertainty for credit unions,” Stverak said. “We specifically called on NCUA to initiate a formal legal review, issue public guidance, and coordinate with federal regulators to ensure consistent treatment across the financial services system.”
Stverak emphasized that credit unions, particularly those serving servicemembers, veterans, and their families, depend on a stable and predictable payments framework.
“As our letter made clear, uncertainty in this space could lead to higher operational costs, reduced services, and disruption to the seamless digital payment systems our members rely on every day,” he said. “While NCUA need not mirror the OCC’s legal approach exactly, the agency has existing authorities under the Federal Credit Union Act and its own regulations to provide clarity and, where appropriate, preempt conflicting state requirements.
“We strongly encourage NCUA to build on the concerns and recommendations we outlined and take action, if within its authority, to ensure credit unions are not placed at a competitive or regulatory disadvantage. Parity across federally regulated institutions is essential,” Stverak continued. “DCUC will remain actively engaged and continue advocating to ensure credit unions are protected as this issue evolves.”
America's Credit Unions President/CEO Scott Simpson said the trade group appreciates the OCC formally clarifying federal preemption to protect financial institutions and consumers from the “harmful effects of this misguided Illinois law. With the clarity that states cannot interfere with national bank powers, Americans are also protected from other efforts that would undermine the safety and stability of the payments system.
“Based on the Federal Credit Union Act and credit unions' status as federal instrumentalities, federal credit unions should also be preempted from the IFPA and any other state law that encroaches against these national authorities. We are confident the NCUA will continue its leadership to provide similar clarification for credit unions and their millions of members,” concluded Simpson.
In a joint statement, IFPA litigation co-plaintiffs welcomed the OCC’sactions.
“The OCC’s actions make it clear that states cannot interfere with national bank powers that President Lincoln and Congress placed firmly under federal authority more than 160 years ago and remain essential to the effective functioning of our banking system,” the group stated. “These actions are consistent with the OCC’s prior amicus filings in this case and with the agency’s public commitment – both in this Administration and the previous one – to defend federal preemption. They reinforce the firm legal foundation of our ongoing appeal and underscore that Illinois’ misguided law is unlawful and should not be implemented. The OCC’s actions should also send a strong signal to other states to follow the law and not repeat Illinois' mistake.
“We appreciate the OCC’s clear affirmation that federal law must govern national banking activities,” the group continued. “We encourage the NCUA to follow the OCC's lead and similarly defend federal credit union laws to ensure that IFPA is halted for all financial institutions and that a consistent national framework is preserved going forward.”
Litigation co-plaintiffs are: the Illinois Bankers Association, Illinois Credit Union League, American Bankers Association and America's Credit Unions.