Pay your property taxes in Cook County, Illinois, with a credit card and you will see a convenience fee tacked on at checkout. That fee exists because the county has to cover the interchange charge, typically 1.5% to 3% of the transaction on a credit card, that flows to the bank behind your card every time you swipe or tap. Illinois passed a law to eliminate interchange on tax and government payments starting July 1, 2026. The federal government just made sure that law will not reach nationally chartered banks.
On April 24, 2026, the Office of the Comptroller of the Currency published two interim final actions that together spell out how national banks and federal savings associations may set non-interest charges, and explicitly override the Illinois Interchange Fee Prohibition Act, known as the IFPA. The federal rule takes effect June 30, exactly one day before the Illinois statute was scheduled to kick in.
What the OCC changed and why the timing matters
The OCC released a pair of coordinated bulletins. The first is an interim final rule, listed in the agency’s 2026 bulletin index, that covers every national bank and federal savings association. It lays out how these institutions may set fees for services under federal law and directs examiners to treat that authority as settled during supervision.
The second action is a targeted preemption order aimed squarely at the Illinois IFPA. That state law, codified as 815 ILCS 151/ and set to take effect under Article 150 on July 1, 2026, bans charging or receiving interchange fees on electronic transactions involving taxes and government payments. The OCC concluded that federal banking law overrides the state ban, and its order states that national banks “are neither subject to nor required to comply” with the IFPA when processing those transactions.
The one-day gap between the federal effective date and the state effective date is deliberate. By locking in its rule on June 30, the OCC eliminates any window in which a national bank operating in Illinois could face conflicting legal obligations. The instruction to bank examiners is equally blunt: do not criticize institutions that continue to assess interchange fees on covered government-related payments.
The OCC framed both actions as clarifications of powers national banks have long held, not as a new expansion. In earlier guidance, including Bulletin 2026-17, the agency described national banks as holding “incidental powers necessary to conduct the business of banking,” including the authority to set fees for services. The April 24 actions codify how those powers interact with state attempts to limit specific categories of charges.
How interchange fees work on government payments
Interchange fees are set by card networks like Visa and Mastercard and paid by the merchant, or in this case the government agency, that accepts the card. On a typical credit card transaction the fee runs roughly 1.5% to 3% of the payment amount, according to published network rate schedules. (Debit card interchange is lower and separately regulated.) On a $2,000 property tax bill, that could mean $30 to $60 flowing from the collecting agency to the card-issuing bank and other participants in the payment chain.
Government entities handle that cost in different ways. Some absorb it, effectively reducing the revenue they collect. Others pass it along as a convenience fee charged to the taxpayer at checkout. The Illinois IFPA was designed to stop interchange from eroding the face value of tax and government obligations in the first place, so that when a resident pays $2,000 in taxes, the full $2,000 reaches the public treasury.
Federal interchange regulation already exists on a separate track. The Federal Reserve Board’s Regulation II, finalized under the Durbin Amendment to the Dodd-Frank Act, caps debit card interchange fees for banks with more than $10 billion in assets. That rule governs the price level of certain debit interchange and operates independently of the OCC’s new actions. The distinction matters: the Fed regulates how much banks can charge on debit swipes, while the OCC’s move addresses whether states can ban interchange altogether on a specific category of transactions processed by federally chartered institutions.
What this means for taxpayers and local governments
For Illinois residents who pay taxes or fees by card, the practical effect depends on which bank issued the card. If a national bank issued it, interchange will continue to flow on government transactions regardless of the IFPA. If a state-chartered bank issued it, the Illinois law could still apply once it takes effect July 1, because the OCC’s jurisdiction does not extend to state-chartered institutions. That split creates a two-track system: the rules governing a single transaction at a county clerk’s office could differ based on the charter type of the card issuer, something neither the taxpayer nor the clerk is likely to know at the point of sale.
For government agencies, the picture is similarly uneven. A county treasurer hoping to eliminate interchange costs on tax payments may find that the IFPA delivers only partial relief, since a significant share of card transactions are processed through nationally chartered banks. Without public data on the charter-type breakdown of cards used for Illinois government payments, the actual savings are hard to estimate.
As of early June 2026, no national bank has released a public statement explaining how these actions will change its fee schedules or revenue outlook. The OCC has not published data estimating how much interchange revenue is at stake nationally or within Illinois. There is no public record of Illinois lawmakers or the state attorney general filing a legal challenge to the preemption order, and the Illinois attorney general’s office has not publicly commented on the OCC’s actions. The window for such a challenge remains open.
Why other statehouses are paying attention
Illinois is not the only state where legislators have shown interest in restricting interchange fees tied to government payments. The OCC’s preemption order sends a pointed signal: if a state law targets nationally chartered banks, the federal government will step in to block it.
That does not close every door. State legislatures could try to draft laws that apply only to state-chartered banks or to non-bank payment processors, sidestepping the OCC’s jurisdiction. Such an approach would create a patchwork where the rules differ depending on which institution issues the card or processes the payment, adding complexity for government agencies that accept cards from multiple issuers.
Neither major banking trade groups nor merchant advocacy organizations had issued public statements responding to the OCC’s actions as of early June 2026. That silence leaves the political and commercial reaction an open question heading into the June 30 effective date.
How durable is the OCC’s federal shield for interchange fees
For now, national banks and federal savings associations have a reinforced federal shield for their interchange fee practices on government transactions, at least against the Illinois law and any state statute built on the same model. How durable that shield proves will depend on whether Illinois or another state mounts a legal challenge, how the Federal Reserve’s own interchange rulemaking evolves, and whether Congress decides to weigh in directly. The OCC’s April 24 actions may settle the question for federally chartered banks today, but the broader contest over who controls the economics of card-based payments, and who absorbs the cost, is just getting started.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
