The next time you tap your credit card at a coffee shop, the owner on the other side of the counter will hand somewhere between 1.5% and 3.5% of your purchase to the bank that issued your card. Multiply that slice across every card transaction in the country and the total is staggering: U.S. merchants paid more than $170 billion in interchange fees in 2024, according to estimates from the Nilson Report, a payments-industry research publication. Now the federal regulator that oversees the nation’s largest banks has made clear that no state legislature can touch those fees.
The Office of the Comptroller of the Currency published an interim final rule in May 2026 confirming that nationally chartered banks have the legal authority to charge interchange fees at rates set by card networks like Visa and Mastercard. At the same time, the agency issued a preemption order that strikes down the Illinois Interchange Fee Prohibition Act, the most aggressive state attempt yet to cap swipe costs. Both actions take effect 42 days from publication, putting every other state capitol on notice.
What the OCC actually did
The agency moved on two fronts simultaneously. The interim final rule establishes that a national bank may rely on an outside party, such as Visa or Mastercard, to set the amount of a fee the bank charges to merchants, as long as the fee is properly disclosed and consistent with safety-and-soundness standards. The OCC characterized this not as a grant of new authority but as a clarification of powers national banks have held since the National Bank Act of 1864.
The companion preemption order targets Illinois specifically. It declares that federal banking law overrides the state’s interchange fee prohibition, meaning Illinois cannot bar or effectively cap swipe fees imposed by national banks or their operating subsidiaries. The OCC distributed the order to every institution it supervises through OCC Bulletin 2026-17, signaling that the legal reasoning applies coast to coast, not just in Springfield.
The legal backbone is the Supreme Court’s 1996 decision in Barnett Bank of Marion County v. Nelson. That ruling created a test courts still apply: a state law is preempted when it “prevents or significantly interferes” with a power granted to national banks under federal law. The OCC applied that standard and concluded that capping or prohibiting interchange fees clears the bar, because it restricts a core pricing function tied to the business of banking.
Who is covered and who is not
The OCC supervises nationally chartered banks, the institutions with “National” or “N.A.” in their names, along with federal savings associations. Those are the banks shielded by the preemption order. State-chartered banks, which answer to state regulators and the FDIC, fall outside the OCC’s jurisdiction. So do credit unions, which are overseen by the National Credit Union Administration. In theory, a state legislature could still regulate interchange fees charged by those institutions without bumping into this rule.
In practice, that carve-out is narrower than it looks. The largest card-issuing banks in the country, including JPMorgan Chase, Bank of America, Citibank, and Wells Fargo, all hold national charters. Together they account for a dominant share of U.S. credit and debit card volume. The OCC’s order may not technically cover every bank, but it covers the ones that process the bulk of swipe-fee revenue.
How this fits the broader swipe-fee fight
Interchange fees have been a political and regulatory battleground for more than a decade. The 2010 Durbin Amendment, part of the Dodd-Frank Act, already caps debit-card interchange fees for banks with more than $10 billion in assets. The Federal Reserve finalized a lower cap that took effect in 2025, bringing the ceiling down to roughly 14.4 cents plus 4 basis points per transaction, with a small fraud-prevention adjustment. But the Durbin Amendment does not touch credit-card interchange, which runs significantly higher and generates far more revenue for large issuers.
That gap is exactly what Illinois tried to fill. The state’s Interchange Fee Prohibition Act would have barred nationally chartered banks operating in Illinois from collecting interchange fees on certain card transactions, a direct challenge to the pricing structure Visa and Mastercard have built over decades. It is also the gap targeted by the bipartisan Credit Card Competition Act, a bill reintroduced in Congress that would require large credit-card-issuing banks to offer merchants a choice of at least two unaffiliated networks for routing transactions. Sponsors Sen. Dick Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.) argue that network competition would push interchange rates down. Opponents, including the American Bankers Association, counter that lower interchange revenue would force banks to cut card rewards programs and tighten credit access.
The OCC’s rule does not resolve that congressional debate, but it slams shut one door. States that grew impatient waiting for federal legislation and tried to act on their own now face a preemption wall for any fee charged by a nationally chartered bank. Illinois was the first to hit it. Other states weighing similar proposals, including those with pending interchange-related bills, will have to reckon with the same barrier.
What merchants and consumers should watch
For merchants, the immediate reality is blunt: relief on swipe fees will not come from state capitols, at least not for transactions processed through national banks. Retail trade groups, including the National Association of Convenience Stores and the National Retail Federation, have long argued that interchange fees rank among the highest operating costs retailers face, trailing only labor in many sectors. With state-level caps now off the table for federally chartered institutions, those groups will need to redirect their energy toward Congress or toward the Federal Reserve’s periodic review of the Durbin Amendment’s debit-fee ceiling.
For consumers, the effect is indirect but persistent. Merchants rarely eat swipe-fee costs themselves; instead, those charges get folded into shelf prices. If credit-card interchange remains uncapped, the upward pressure on retail prices stays baked in, even for shoppers who pay with cash or debit cards and never benefit from credit-card rewards.
Several open questions will shape what comes next. The OCC has not detailed how its examiners will apply the Barnett Bank “prevents or significantly interferes” test to specific fee arrangements during routine bank examinations. The Consumer Financial Protection Bureau and the Federal Reserve each hold overlapping authority over aspects of card-fee regulation, and as of June 2026, neither agency has publicly endorsed or challenged the OCC’s preemption reasoning. Any statement or rulemaking from either could complicate or reinforce the OCC’s position.
What stands between this rule and a courtroom
Illinois passed its interchange fee prohibition because retail trade groups in the state pushed hard for it, and the political appetite to lower card costs has not faded. A legal challenge would test whether the OCC’s reading of Barnett Bank holds up when applied specifically to interchange, a question no federal appeals court has squarely addressed.
The rule’s comment period adds another layer of uncertainty. Because the OCC used an interim final rule rather than the standard notice-and-comment process, the policy takes effect quickly, but the agency is still accepting public input. Merchants, consumer advocates, and state attorneys general are expected to file comments urging narrower preemption or stronger safeguards against excessive fees. Banks and card networks will likely argue that uniform national standards keep payment systems efficient and predictable.
Unless a court issues a stay or a subsequent rulemaking reverses course, the status quo is now locked in: national banks may continue collecting interchange fees at levels determined by Visa, Mastercard, and other networks, and state laws that try to cap or prohibit those fees will be treated as preempted. How aggressively states contest that position, and how federal judges respond, will determine whether this interim rule hardens into a permanent feature of the payments landscape or becomes the catalyst that finally forces Congress to act on credit-card competition.
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.
