Restaurants, retailers, and card-issuing banks operating in Illinois will lose a state-level shield against interchange fees on tips and sales tax in less than a month. The Office of the Comptroller of the Currency has issued an interim final rule, effective June 30, 2026, that confirms national banks can charge non-interest fees, including interchange fees from payment card activity, regardless of state restrictions. A companion order explicitly preempts Illinois’s Interchange Fee Prohibition Act, which had banned those fees on the tax and gratuity portions of card transactions and restricted how banks could use transaction data.
Two OCC actions rewrite the fee rules for national banks
The OCC announced both measures in a single release, with agency officials pairing an interim final rule with a separate interim final order. The rule amends a specific section of federal banking regulations, 12 CFR 7.4002, to spell out that national banks hold the authority to set and collect non-interest charges and fees. That authority extends to interchange fees whether the bank itself sets the rate or a card network such as Visa or Mastercard does so on the bank’s behalf.
The second action targets Illinois directly. In the OCC’s interim final order on the Interchange Fee Prohibition Act, accessible through its preemption bulletin, the agency concludes that federal law overrides the state statute for national banks and federal savings associations. Illinois’s law had carved out the tax and gratuity portions of a card transaction, barring banks from collecting interchange fees on those amounts and limiting how transaction data could be used. Under the OCC’s order, those carve-outs no longer apply to federally chartered institutions.
What the June 30 effective date means for merchants and banks
The interim final rule carries an effective date of June 30, 2026, and the OCC’s summary in its rulemaking bulletin makes clear that, after that day, national banks may rely on federal authority to set non-interest fees without regard to conflicting state caps. Once that date arrives, any state-level limit that conflicts with a national bank’s federally authorized fee powers will be overridden for those institutions. Illinois’s IFPA is the first explicit target, but the regulatory language is broad: it covers non-interest fees generally, not just those tied to one state’s law.
For Illinois merchants, the practical change is straightforward. A restaurant that processes a $100 dinner check with $8 in sales tax and a $20 tip currently avoids interchange fees on that $28 slice under the IFPA. After June 30, the national bank or federal savings association issuing the customer’s card can collect interchange on the full $128. The same logic applies to any retailer where tax makes up a meaningful share of the transaction total, such as furniture stores, electronics outlets, or auto dealers.
Banks that issue cards through national charters or federal savings association charters stand to recover revenue they had been forgoing on Illinois transactions. The OCC framed the state law as a source of instability for bank operations, emphasizing that a patchwork of state rules could interfere with uniform fee-setting authority. However, the agency’s published documents do not quantify how much interchange revenue was lost under the IFPA or how many institutions adjusted their Illinois processing to comply with it.
What the OCC has not disclosed
Several gaps remain in the public record. The OCC’s bulletins and news release do not include data on the dollar volume of interchange fees collected on tax and gratuity portions in Illinois before the IFPA took effect. No official estimate appears for how much additional fee revenue national banks will capture once the preemption is active. The agency has not published comment letters from banks, merchants, or consumer groups responding to the interim final rule, and no economic impact analysis accompanies the published documents.
Illinois state regulators have not issued a public response referenced in the OCC’s materials. Whether the state will challenge the preemption order in court, seek legislative workarounds, or accept the federal determination is an open question. The OCC’s order applies only to national banks and federal savings associations, so state-chartered banks that are not federally supervised could still be bound by the IFPA. That split creates a two-track system where the fee rules depend on the charter type of the card-issuing bank, a distinction most consumers and merchants will not see at the point of sale.
Distinguishing hard evidence from open questions
The strongest evidence in this story comes from three OCC primary documents: the news release announcing both actions, the bulletin summarizing the rule change to 12 CFR 7.4002, and the bulletin detailing the IFPA preemption order. Each is an official agency publication with a clear effective date and a specific legal basis. The rule’s amendment of 12 CFR 7.4002 is a concrete regulatory change, not a proposal or request for comment, and the preemption order names the Illinois statute by title and explains why federal banking law takes precedence.
What the documents do not supply is any independent analysis of consumer or small-business costs. No third-party economic study, no bank earnings disclosure, and no merchant trade group estimate appears in the record. Without those inputs, it is not possible to say from the public filings alone whether the shift will materially raise prices for diners, shoppers, or other card users. Readers should treat any projection about fee increases as speculative until banks publish updated fee schedules or Illinois releases transaction-level data that isolates the tax and tip components.
There is also no detailed discussion of how card networks and acquirers will communicate the change to merchants. The OCC’s materials focus on the legal authority of issuing banks rather than on the operational steps that processors and payment service providers will take to adjust their systems. That leaves open questions about how quickly existing contracts will be updated and whether merchants will receive itemized statements that clearly show the newly chargeable tax and gratuity portions.
What affected businesses should do before June 30
With the deadline approaching, Illinois businesses that rely heavily on card payments should prepare for the new regime rather than waiting to see fees change on their statements. The first step is to review current merchant agreements and processor invoices to understand how interchange costs are passed through today. Many small restaurants and retailers operate under blended pricing that obscures the underlying interchange, so owners may not realize how much of each transaction is currently shielded by the IFPA.
Merchants should also ask their acquirers or payment service providers to explain how they plan to handle the OCC’s preemption order. Key questions include whether pricing structures will change automatically on June 30, whether any new surcharges or adjustments will appear, and how those changes will be disclosed. Businesses that operate in multiple states may want to compare Illinois locations to stores elsewhere to see whether the restored interchange on tax and tips pushes their local costs out of line.
On the banking side, national banks and federal savings associations that issue cards into the Illinois market should verify that their compliance teams, pricing committees, and customer communications are aligned with the new authority. Although the OCC’s rule confirms their power to charge interchange on the full transaction amount, institutions still face competitive and reputational pressures. Some may choose to phase in changes, maintain existing concessions for certain merchant categories, or offer offsetting rewards and benefits to cardholders.
Finally, trade associations for restaurants, retailers, and community banks may decide to gather their own data once the rule is in force, documenting how total payment acceptance costs evolve over time. In the absence of official economic analysis from the OCC or the state, independent tracking could provide the only concrete evidence of how the end of Illinois’s interchange shield for tax and tips affects day-to-day commerce.
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.
