Every time you tap your credit card at a coffee shop or swipe at a gas pump, the merchant pays a fee you never see on your receipt. On June 30, 2026, the Office of the Comptroller of the Currency made sure it stays that way. The federal banking regulator finalized an interim rule that writes interchange fees directly into the regulation governing what national banks can charge, closing a legal gray area that had attracted state-level legislative challenges. The timing was no accident: the rule landed one day before Illinois’ Interchange Fee Prohibition Act was set to take effect.
For the millions of U.S. small businesses that accept cards, the rule locks in a cost structure that already takes a significant bite out of revenue. Credit card interchange fees typically range from 1.5% to 3.5% of each transaction, and U.S. merchants paid more than $170 billion in total card-processing fees in 2023, according to the Nilson Report, with interchange accounting for the largest share. For banks, the rule protects one of their most dependable income streams. For shoppers, those fees stay invisible on receipts but remain baked into the prices on the shelf.
What the OCC actually changed
The interim final rule amends 12 CFR 7.4002, the federal regulation that spells out which non-interest fees national banks may impose. The revised text now explicitly lists interchange charges from payment card activity. It also covers fees “set by or in consultation with third parties,” language tailored to how interchange actually works: Visa and Mastercard publish the fee schedules, and card-issuing banks collect the revenue.
By codifying that arrangement, the OCC eliminated any argument that a national bank’s interchange income depends on a third party’s decision and therefore falls outside the bank’s own authority. That distinction matters because it is exactly the opening that state-level legislation, most notably in Illinois, had tried to exploit.
The agency bypassed the usual notice-and-comment rulemaking process, citing the urgency of the July 1 Illinois deadline. The rule took effect immediately on June 30, though the OCC is still accepting public comments and could revise the final version. The agency has given no signal it expects significant changes.
Illinois’ interchange ban, blocked before it began
In a separate order issued the same day, the OCC declared that federal law preempts the Illinois Interchange Fee Prohibition Act. Illinois had passed the IFPA to restrict certain interchange charges starting July 1, 2026. The OCC’s position: because national banks hold federally granted authority to charge these fees, a state statute that blocks them directly conflicts with federal banking powers.
The preemption order frames the Illinois law as an obstacle to the exercise of national bank authority, placing it in the same legal category as state measures that federal banking regulators have historically overridden. Illinois officials or merchant groups could challenge that conclusion in court, potentially arguing that the IFPA targets card network practices or merchant-acquirer relationships rather than bank powers. They might also contest the OCC’s use of an expedited interim order instead of a full rulemaking record.
Regardless of how that plays out, the OCC has drawn a clear line. Any state considering interchange limits that touch national banks now has to weigh the near-certainty that the federal regulator will invoke preemption. That calculus may push future legislative efforts toward regulating card networks or payment processors directly, rather than the banks that collect the fees.
The broader regulatory picture
The OCC’s move arrives in the middle of a long-running federal fight over interchange. The Durbin Amendment, enacted in 2010, capped debit card interchange fees for banks with more than $10 billion in assets. The Federal Reserve, which administers that cap under Regulation II, proposed lowering it from roughly 21 cents per transaction to about 14.4 cents in late 2023, but withdrew the proposal in March 2025 after facing legal challenges from bank industry groups.
Credit card interchange, by contrast, has never been subject to a federal cap. Legislation that would change that, most notably the Credit Card Competition Act championed by Sens. Dick Durbin and Roger Marshall, has been introduced in multiple sessions of Congress but has not advanced to a floor vote. The OCC’s new rule does nothing to create a credit interchange cap. What it does is fortify the legal foundation for banks to collect whatever interchange rates the card networks set, shielding that revenue from state-level interference.
Merchants have long argued that interchange fees function as a hidden tax on consumers because retailers pass the cost along through higher prices. Banks and card networks counter that interchange funds fraud protection, rewards programs, and the payment infrastructure that makes card acceptance possible. That argument carries weight with consumers who value cash-back and travel rewards: if interchange revenue were significantly reduced, banks would almost certainly scale back those programs.
The OCC has not published any economic impact analysis alongside the rule. The agency’s public docket does not yet contain stakeholder comments, though organizations such as the National Retail Federation and the American Bankers Association have previously taken strong public positions on interchange policy. That gap in the rulemaking record leaves important questions unanswered, including how much interchange revenue national banks stand to retain that might otherwise have been restricted, and what the cumulative cost to merchants and consumers looks like over time.
Where the fight goes from here
For shoppers, interchange fees will remain embedded in retail prices rather than itemized on receipts. The OCC directs consumers with banking complaints to its Help With My Bank portal, but the agency has released no data on interchange-related grievances tied to this rulemaking. If you rely on credit card rewards for travel or cash back, the rule’s practical effect is to preserve the status quo that funds those programs.
For merchants, the immediate reality is that the federal government has sided with banks on the question of who gets to regulate swipe fees. Small businesses absorbing interchange on thin margins will not see relief from state legislatures as long as the OCC’s preemption framework holds. The public comment period on the interim rule offers one avenue for pushback, though altering the substance of a rule that is already in effect is a difficult path.
The legal fight is likely just beginning. If Illinois or a merchant coalition files suit, courts will have to decide whether the OCC’s preemption reasoning holds up and whether the expedited process was legally justified. Meanwhile, the Credit Card Competition Act remains alive in Congress, offering a separate track for merchants seeking federal intervention on credit interchange rates. Until any of those efforts gains traction, the rule stands, interchange fees flow, and the debate over who really pays for the convenience of plastic moves to its next venue.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
