Every time you tap, dip, or swipe a card at checkout, the merchant pays an interchange fee that averages roughly 2.2 percent on credit transactions and about half a percent on regulated debit, according to Nilson Report data. Retailers fold most of that cost into shelf prices, so you pay it whether you use plastic, cash, or your phone. In 38 days, a new federal rule will lock that system in place and block any state from trying to change it.
The Office of the Comptroller of the Currency published the rule in May 2026, and it does two things at once: it reaffirms that federally chartered banks have broad authority to set and collect interchange fees, and it preempts the only state law that attempted to limit them. Illinois’ Interchange Fee Prohibition Act was set to take effect on July 1, 2026. The OCC moved first.
What the OCC actually did
The agency issued two companion actions on the same day. The first, described in Bulletin 2026-18, is an interim final rule amending 12 CFR 7.4002. It spells out that national banks and federal savings associations may obtain “non-interest charges and fees,” including interchange, and that those fees may be set by third parties such as card networks. The regulatory text is narrow. The practical effect is not: it shores up the legal foundation for the four-party card model in which Visa, Mastercard, and other networks publish default interchange schedules and thousands of issuing banks adopt them.
The second action, issued as Bulletin 2026-17, is an interim final preemption order aimed squarely at the Illinois IFPA. That state law, signed as Public Act 103-0593, has two operative provisions: one caps interchange on the tax and gratuity portions of card transactions, and the other restricts how banks use cardholder data. The OCC’s order blocks both provisions for every institution the agency supervises.
The OCC’s news release tied the two actions together, calling the Illinois law “complex, potentially unworkable, and destabilizing” if applied to federally chartered banks. That word choice was deliberate. It signals the OCC views even a narrow, state-level fee cap as a structural threat to the national banking system’s pricing model, and it puts every other statehouse on notice.
Where interchange already has a federal track
Debit-card interchange is already regulated at the federal level. The Durbin Amendment, codified at 15 U.S.C. 1693o-2, gives the Federal Reserve authority to cap debit interchange for banks with more than $10 billion in assets. The Fed carries out that mandate through Regulation II (12 CFR Part 235), which sets maximum allowable rates and routing requirements. The current cap sits at 21 cents plus 0.05 percent per transaction, with a one-cent fraud-prevention adjustment, though the Fed proposed lowering it in 2023 and has not yet finalized a new figure.
Credit-card interchange, by contrast, has no federal cap. Lawmakers have tried: the Credit Card Competition Act, introduced by Sens. Dick Durbin and Roger Marshall, would require large credit-card issuers to offer merchants at least two unaffiliated network options for routing transactions, a mechanism designed to create competitive pressure on fees. The bill has been reintroduced in multiple congressional sessions but has not reached a floor vote. The OCC’s new rule does not alter the Durbin debit framework, but it sits alongside it, affirming that bank fee-setting authority under federal charter law operates independently of the Fed’s debit-specific rules.
The numbers behind the swipe
To understand why the OCC acted so forcefully, follow the money. U.S. merchants paid an estimated $172 billion in card-acceptance costs in 2024, according to the Nilson Report, with interchange accounting for the largest share. For a restaurant where tips and sales tax can add 30 percent or more to the base check, the Illinois law’s carve-out for those portions represented real savings. A neighborhood pizzeria running $800,000 a year in card volume, with a quarter of that in tax and tips, stood to recoup several thousand dollars annually under the IFPA. Multiply that across every restaurant, salon, and bar in the state, and the banking industry faced a meaningful revenue hit from a single state’s experiment.
The OCC has not published an economic-impact analysis estimating how much of the interchange cost flows through to consumers versus how much merchants absorb. Without that data, the real-world price effect on everyday purchases remains difficult to quantify with precision. The agency’s materials focus on legal authority and preemption, not on what the rule means for a family’s grocery bill or a small retailer’s margins.
What merchants and shoppers still do not know
The bulletins contain no statements or implementation plans from national banks or card networks, so the industry’s operational response is not yet part of the public record. Issuers may treat the OCC’s move as simple confirmation of the status quo, or competitive pressure from large retailers, some of whom have fought interchange rates for years in federal antitrust litigation, could still push adjustments to fee schedules. Neither outcome can be ruled out.
That antitrust fight is worth noting. Visa and Mastercard agreed in 2024 to a revised settlement with merchants that included temporary interchange-rate reductions, but a federal judge rejected an earlier version of the deal, calling it inadequate. The litigation is ongoing, and its outcome could reshape fee levels independently of anything the OCC or Congress does.
The OCC’s documents also do not address whether banks might restructure card rewards, annual fees, or account terms now that their pricing authority has been explicitly reinforced. Banks have long argued that interchange revenue funds the cash-back and travel-points programs consumers value. If that revenue stream is locked in by federal rule, the incentive to compete on rewards could shift in unpredictable ways.
State-level copycats and the courtroom path ahead
The OCC’s pointed language about “destabilizing” effects was clearly meant to discourage copycats. Any direct attempt by another state to limit interchange for national banks now carries the near-certainty of a similar federal response.
That does not close every door. State lawmakers could pivot toward indirect strategies: data-reporting mandates on card transactions, consumer-disclosure requirements showing the interchange component of a purchase, or restrictions that target state-chartered banks and nonbank payment processors outside the OCC’s jurisdiction. Those approaches would test the boundaries of preemption without directly capping fees.
Courts will likely weigh in as well. Because the OCC issued an interim rule, the agency is still accepting public comment, and affected parties could argue that the regulator read its preemption authority too broadly or failed to adequately weigh state consumer-protection interests. Illinois Attorney General Kwame Raoul’s office backed the IFPA during the legislative process, and a legal challenge from the state is plausible. Until any litigation plays out, the Illinois law is effectively sidelined for national banks. Its reach over state-chartered institutions and nonbank payment providers remains a separate, unresolved question.
What the rule settles and what it leaves on the table for every card-tapping consumer
The legal picture, for now, is clear: federal law firmly favors bank control over interchange pricing, and no state can override that for OCC-supervised institutions. The interim final rule, its companion preemption order, and the agency’s own explanatory release collectively establish that national banks retain broad authority to collect interchange, that Illinois’ carve-out for tax and tip amounts has been neutralized, and that the federal banking regulator will defend a uniform national system against state-by-state fee caps.
What the rule does not settle is the policy question consumers and merchants care about most: whether current interchange levels are efficient, fair, or sustainable, and who ultimately bears the cost. The Credit Card Competition Act sits in Congress without a vote. The merchant antitrust litigation grinds forward without a final resolution. The Fed’s own debit-cap revision remains unfinished. And the OCC’s comment period means the rule itself could still be challenged or modified before it hardens into permanent regulation.
For the 38 days until the rule takes effect, the only certainty is that the price of every swipe will keep being set in Washington and on network servers, not in Springfield or any other state capital.
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.
