If you run a restaurant and watch your card-processing bill climb every month, here is the part that stings: you are paying a swipe fee on the sales tax you collect for the state and on the tip your customer leaves for the server. Illinois passed a law to stop that. On June 30, 2026, a federal agency will erase it, and every other state considering the same idea just lost its playbook.
That slice of every transaction, known as an interchange or “swipe” fee, typically runs between 1.5% and 3.5% for credit cards. Debit cards regulated under the Durbin Amendment carry a lower, federally capped rate (more on that below). Across the full U.S. economy, merchants paid an estimated $170 billion in card-processing fees in 2024, a figure reported by the Nilson Report, a paywalled payments-industry research publication whose annual card-fraud and fee tallies are widely cited by trade groups, though the specific edition and methodology behind the 2024 total have not been independently verified.
That staggering total has turned interchange into a political target at every level of government. Illinois tried to do something about it. Now a federal agency has stepped in to block that effort and warn every other state not to follow.
On June 30, 2026, an interim final rule from the Office of the Comptroller of the Currency takes effect. It declares that setting and collecting interchange fees is a federally authorized power of national banks, and it pairs that declaration with a preemption order that voids an Illinois law designed to limit those very charges. The signal to every other state capitol weighing similar legislation is blunt: your bill is dead on arrival.
What the OCC actually did
The agency announced two linked actions in a single news release. The first is the interim final rule, titled “National Bank Non-Interest Charges and Fees.” It codifies the OCC’s longstanding position that federal banking law already grants national banks the authority to set interchange rates, and that no state may cap, restrict, or restructure those charges.
The second action is a formal preemption order aimed squarely at the Illinois Interchange Fee Prohibition Act (815 ILCS 151/150-1 et seq.). That state law had prohibited banks from charging interchange on the tax or gratuity portion of a card transaction, provided the merchant transmitted the relevant data. It gave merchants a 180-day window to supply documentation, required banks to issue credits within 30 days for any overcharges, and imposed a $1,000-per-transaction civil penalty for violations. An anti-circumvention clause attempted to prevent banks from simply relabeling fees to dodge the rules.
The OCC framed both steps as necessary to prevent a “patchwork” of state-level standards and to head off what it called “imminent negative effects” on national banks. Because the agency issued the rule as an interim final rule rather than a standard notice-and-comment proposal, it carries the force of law on June 30 even though the public comment period remains open. The OCC’s proposed issuances page lists both the rule and the preemption order, and comments can be filed through the agency’s electronic portal.
One critical distinction: the rule applies only to national banks and federal savings associations, the institutions the OCC charters and supervises. State-chartered banks, which are regulated by state banking departments and the FDIC or Federal Reserve, are not directly covered. In practice, though, the largest card-issuing banks in the country hold national charters, so the rule’s reach is enormous.
Why Illinois passed the law in the first place
Illinois was not acting on a whim. Restaurants and service-industry businesses had long complained that interchange fees are calculated on the total amount charged to a card, including sales tax and tips. A server’s $10 tip on a $50 dinner means the restaurant pays a swipe fee on $60 rather than $50, even though the tax goes to the state and the tip goes to the employee. For a busy restaurant processing thousands of card transactions a month, those fractions compound into real money.
The Illinois legislature responded with one of the most targeted interchange laws any state had attempted. Rather than trying to cap overall rates, a strategy that would have invited immediate legal challenge, it carved out only the tax and gratuity portions. Supporters argued the narrower approach was harder for courts to strike down because it did not dictate what banks could charge on the underlying sale.
The law had not been widely enforced before the OCC stepped in. No public record of penalties collected or credits issued exists, so there is no track record to measure its real-world impact. But the law’s mere existence put other state legislatures on notice that interchange regulation was possible. Beyond Illinois, lawmakers in states including New York and Georgia had introduced or studied proposals targeting interchange costs in recent legislative sessions, though none had reached the governor’s desk before the OCC acted.
The bigger federal backdrop
Interchange fees have been a federal policy flashpoint for more than a decade. The 2010 Dodd-Frank Act included the Durbin Amendment, which directed the Federal Reserve to cap debit card interchange for banks with more than $10 billion in assets. In 2024 the Fed finalized an updated cap that lowered the ceiling to 14.4 cents plus 4 basis points of the transaction value, with a 1.3-cent fraud-prevention adjustment, effective July 1, 2025. That cap 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.
In March 2024, Visa and Mastercard agreed to a settlement valued at approximately $5.6 billion to resolve a long-running antitrust lawsuit brought by merchants. The deal included temporary rate reductions, but a federal judge in the Eastern District of New York rejected the settlement in June 2024, calling the relief insufficient. That litigation remains pending, with no new settlement announced as of June 2026.
On Capitol Hill, the bipartisan Credit Card Competition Act, championed by Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.), has been introduced in multiple sessions of Congress. It would require large credit card-issuing banks to offer merchants a choice of at least two unaffiliated processing networks, a move designed to create competitive pressure on interchange rates. The bill has not advanced to a floor vote in any session. The OCC’s rule does not reference any pending congressional legislation or explain how a new federal statute might alter the agency’s interpretation.
What this means for merchants and consumers
For businesses that accept cards from national bank issuers, the practical effect is immediate: interchange fees will continue to be calculated on the full transaction amount, including tax and tip, in every state. Illinois merchants who expected relief under the state law will not receive it. Merchants in states that were drafting similar bills now face the reality that any law targeting national bank interchange is likely to be preempted before it can take hold.
The OCC’s documents do not include data on how much interchange revenue national banks currently collect or how costs for merchants and consumers might shift after June 30. Without those figures, specific projections about price increases at the register are impossible to make responsibly.
What is not speculative is the direction of the pressure. Merchants consistently argue that higher processing costs get passed along through higher prices. The National Retail Federation has described interchange fees as one of the largest operating costs retailers face after labor. Whether that pressure intensifies or stabilizes will depend partly on the unresolved Visa/Mastercard litigation and partly on whether Congress finds the votes to act.
Who might fight back before the comment window closes
Several questions remain unanswered as of June 2026. No formal responses from state attorneys general have surfaced publicly, and Illinois has not announced whether it will challenge the preemption order in court. The OCC’s own documents acknowledge the possibility of litigation but do not identify specific threatened lawsuits or timelines.
A legal challenge, if one comes, would likely center on whether the OCC overstepped its authority. Federal preemption of state banking laws is well established, but critics argue that interchange fee regulation is a consumer-protection and competition matter, not a core banking power. That distinction could matter in court.
The public comment period on the interim final rule is still open, and the volume of filings from banking trade groups, merchant associations, and consumer advocates will signal how aggressively each side plans to push. As of late May 2026, the OCC’s comment portal does not yet show a broad wave of submissions, though major trade groups typically file closer to the deadline.
If the rule survives legal challenges and Congress does not intervene, the OCC will have established a precedent that reaches well beyond Illinois. Any state law that attempts to cap, restrict, or condition interchange fees charged by national banks will face the same preemption argument. For merchants who had been counting on their state legislatures to deliver relief from rising swipe fees, the path just got considerably narrower, and the only remaining route runs through Washington.
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.
