A coffee shop owner in Chicago loses about two cents on every dollar when a customer taps a credit card. That cut, called an interchange fee, goes to the bank that issued the card before the merchant sees a dime. Across every card terminal in the country, those small slices added up to an estimated $176 billion in total card processing fees paid by U.S. merchants in 2024, according to the Nilson Report. A federal rule finalized by the Office of the Comptroller of the Currency now guarantees that nationally chartered banks will keep collecting those fees on Washington’s terms, and no state capitol can say otherwise.
The OCC’s interim final rule takes effect June 30, 2026. It amends 12 CFR 7.4002 to formally codify that national banks and federal savings associations hold the authority to charge interchange fees under federal law, free from any state-level cap or prohibition. In a separate preemption order, the agency declared that these institutions are not subject to the Illinois Interchange Fee Prohibition Act, a state law set to take effect just one day later on July 1, 2026.
Why the OCC moved before Illinois could
Illinois became the first state to pass a law directly targeting interchange fees when Governor J.B. Pritzker signed the Interchange Fee Prohibition Act (Senate Bill 1524). The law would have barred card-issuing banks from charging interchange fees on the tax and tip portions of card transactions within the state, a narrow but symbolically significant restriction that merchant groups hoped would become a model for other legislatures.
The OCC preempted it before it could take hold. The agency cited the authority granted to nationally chartered banks under 12 U.S.C. § 24 (Seventh), the provision of the National Bank Act that spells out the broad incidental powers of national banks, including the power to set fees and charges for services.
In its news release, the OCC framed the action as necessary to “provide clarity and uniformity” for banks and merchants operating across state lines. By writing interchange authority into a formal regulation rather than relying on interpretive letters or informal guidance, the agency constructed a legal barrier that is far harder for any state to challenge or work around. The rule applies nationwide: any legislature that passes a similar fee restriction will hit the same federal wall when it comes to nationally chartered banks.
What this means for merchants paying swipe fees
For business owners, the practical message is blunt. The fees they pay every time a customer uses a card will continue to be set by Visa, Mastercard, and their issuing banks, not by state lawmakers. Average credit card interchange rates in the U.S. run roughly 2.0% to 2.3% per transaction, according to merchant trade group estimates and payment industry data. Debit card interchange averages around 0.5% to 0.7% for transactions at banks covered by the Federal Reserve’s Regulation II cap. For a small restaurant doing $500,000 in annual credit card sales, that translates to $10,000 to $11,500 a year in credit card interchange alone.
The OCC’s rule does not set or cap any specific fee amount. It simply confirms that the power to charge these fees belongs to national banks under federal law. Merchants who had hoped Illinois-style legislation would give them statutory leverage over interchange pricing now have no such tool at the state level.
“The OCC’s preemption order is a gut punch to every small business owner who thought their state capitol could finally do something about swipe fees,” Doug Kantor, general counsel of the National Association of Convenience Stores, said in a statement published by the Merchants Payments Coalition in May 2026. “It tells merchants that no matter how loud the outcry, the only path to relief runs through Congress.”
One critical distinction: the OCC regulates nationally chartered banks and federal savings associations. It does not oversee state-chartered banks or credit unions, which fall under state banking departments and the National Credit Union Administration, respectively. However, national banks and their card-issuing affiliates handle the vast majority of credit card transaction volume in the U.S., which limits the practical reach of any state law even if it could survive for state-chartered institutions. Whether state interchange laws could apply to those smaller institutions is a separate legal question the OCC’s rule does not answer.
Where this fits in the larger interchange fight
Federal regulation of interchange fees already has a precedent, though a limited one. The Durbin Amendment, enacted as part of the 2010 Dodd-Frank Act and implemented through the Federal Reserve’s Regulation II, caps debit card interchange fees for banks with more than $10 billion in assets. The Fed proposed a lower cap in 2023 and finalized the reduction in 2024, though that updated cap faced legal challenges from bank industry groups. Regardless of where the debit cap lands, the Durbin Amendment applies only to debit cards and only to the largest issuers.
Credit card interchange remains unregulated at the federal level, which is precisely the gap Illinois tried to fill from the state side. Meanwhile, the bipartisan Credit Card Competition Act has been reintroduced in Congress multiple sessions running. The bill would require large credit card-issuing banks to offer merchants a choice of at least two unaffiliated card networks for processing each transaction, a mechanism designed to create competitive pressure on interchange rates. It has not passed, but its repeated reintroduction signals that federal lawmakers in both parties view interchange costs as a live political issue.
The Dodd-Frank Act also established a framework for federal preemption of state consumer financial laws, generally requiring that a state law “prevent or significantly interfere” with a national bank’s exercise of its powers before preemption applies (12 U.S.C. § 25b). The OCC’s determination that the Illinois Interchange Fee Prohibition Act meets that threshold is central to its legal reasoning and could become a focal point if the state mounts a court challenge.
Taken together, the OCC’s rule closes the state-level door while the federal-level debate remains unresolved. For merchants and their trade groups, the path to lower interchange fees now runs almost exclusively through Congress or through the card networks’ own pricing decisions.
What remains unresolved after June 30
Several significant questions surround the OCC’s action. The agency issued both the rule and the preemption order as interim final rules, meaning they took effect without a standard notice-and-comment period. The OCC justified the compressed timeline by pointing to the need for legal clarity before the Illinois law’s July 1 start date. Whether a formal comment period will follow, and whether public input could alter the final text, has not been specified in the published bulletins. That procedural shortcut may itself draw legal challenges from critics who argue a preemption decision of this magnitude deserved fuller public deliberation.
Illinois has not publicly signaled whether it will challenge the preemption order in court, pursue a legislative workaround, or accept the federal determination. No economic impact analysis accompanied the OCC’s rule, so there is no official projection of how much interchange revenue national banks collect from Illinois merchants specifically or how fee levels might shift if competitive pressure were introduced.
Visa and Mastercard, the two networks that set the interchange rate schedules their issuing banks follow, have not issued public statements responding to the OCC’s rule as of early June 2026. Their silence is notable: both companies have faced years of antitrust litigation and political pressure over interchange pricing, including a proposed class-action settlement with merchants that a federal judge rejected in 2024.
How the state-versus-federal swipe fee standoff shapes what merchants pay next
For business owners absorbing swipe fees and consumers who share those costs through higher shelf prices, the OCC’s rule settles one question and sharpens others. The legal authority of national banks to charge interchange fees is now formally written into federal regulation, and no state law can override it for those institutions. But the rule does nothing to address the underlying complaint: that interchange rates are too high and that the market lacks sufficient competition among networks.
The most consequential developments in the months ahead will likely come from outside the OCC. Whether Illinois or another state files a legal challenge, whether Congress advances the Credit Card Competition Act, and whether Visa and Mastercard adjust their fee schedules in response to the political pressure that prompted Illinois to act in the first place will determine whether this rule marks the end of the state-level interchange fight or just the beginning of a louder federal one. Until any of those forces produce a change, the swipe fee landscape for nationally chartered banks stays exactly where it was, now with an explicit federal stamp of approval.
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.
