Merchants in Illinois and potentially other states just lost a layer of protection against credit-card swipe fees. The Office of the Comptroller of the Currency (OCC) issued an interim final rule and a separate preemption order declaring that national banks and federal savings associations do not have to comply with the Illinois Interchange Fee Prohibition Act (IFPA). The National Credit Union Administration (NCUA) published its own interim final rule applying the same logic to federal credit unions, with both federal actions taking effect June 30, 2026. Illinois lawmakers, for their part, had already delayed the state law’s operative provisions under Article 150 from July 1, 2026, to July 1, 2027, creating a gap year in which federal standards will govern without any competing state restrictions.
Why the June 30 preemption date changes the calculus for states
The OCC’s preemption order does not simply pause Illinois’ law. It declares that the IFPA’s two main provisions, prohibiting interchange fees on tax and gratuity portions of a transaction and restricting how card networks use transaction data, do not apply to national banks or federal savings associations at all. That distinction matters because it sets a precedent that any similar state-level fee cap could face the same treatment, effectively limiting states’ ability to regulate card-network economics where federally chartered institutions are involved.
The OCC framed the action around the need for uniform standards for payment card activities and the goal of avoiding a patchwork of state-by-state rules, according to the agency’s official release. The NCUA used parallel reasoning, clarifying that federal credit unions hold independent authority to charge non-interest fees, including interchange fees, and stating its intent to preempt state laws that restrict those fees. Together, the two orders signal that federal regulators see interchange as part of a nationwide payments framework rather than an area where states can easily impose targeted limits.
The hypothesis that at least two additional states will accelerate or revise their own interchange legislation before 2027 remains unconfirmed by any primary source. No state legislature outside Illinois has publicly filed new swipe-fee legislation in direct response to the OCC’s preemption order, based on the available record. The federal actions may instead discourage states from pursuing caps, since the preemption rationale could be applied broadly to any state that tries, especially where national banks, federal savings associations, or federal credit unions dominate local card issuance.
Federal orders and Illinois SB3645: the documentary trail
Three distinct federal and state documents anchor the current situation. First, the OCC’s News Release 2026-32 paired an interim final rule on non-interest charges and fees with an interim final order specifically preempting the Illinois IFPA for national banks and federal savings associations. The order was also published in the Federal Register as FR Doc. 2026-08341, spanning pages 91 FR 23150 through 23158, and it lays out the agency’s analysis of how state limits on interchange would “significantly interfere” with federally authorized banking powers.
Second, the NCUA’s interim final rule, effective June 30, 2026, confirmed that federal credit unions possess the authority to set interchange fees independent of state restrictions. By explicitly aligning its interpretation of federal credit union fee authority with the OCC’s approach to national banks, the NCUA effectively extended the same preemption logic across a large share of the card-issuing market, further narrowing the practical reach of state-level interchange laws.
Third, Illinois legislators amended the IFPA’s implementation schedule through Senate Bill 3645, which pushed the operative date for Article 150’s interchange provisions to July 1, 2027. That change came on top of the original enactment of the IFPA within a broader revenue package, Public Act 104-0004, which can be traced in the state’s public act records. The amendment effectively ensures that, for at least one full year after the federal rules take effect, Illinois’ statutory restrictions will exist on paper but remain dormant for all covered entities.
What this means for merchants, banks, and future legislation
For Illinois merchants, the immediate consequence is that the anticipated relief from interchange fees on sales tax and tips will not materialize on the original timetable, and may never apply to a large portion of card transactions. Because national banks, federal savings associations, and federal credit unions issue many of the cards used in everyday commerce, the OCC and NCUA orders carve out a substantial share of the market from Illinois’ reach even after July 2027.
Banks and credit unions, by contrast, gain regulatory clarity. They can continue to charge interchange on the full transaction amount, including tax and gratuity, and can rely on a single federal framework rather than adapting systems for one state’s carve-outs. Card networks also avoid the operational complexity of segregating Illinois transactions by tax and tip components solely for certain issuers.
Looking ahead, state lawmakers elsewhere face a strategic choice. They can attempt to craft new interchange bills designed to sidestep the OCC and NCUA’s preemption reasoning, or they can shift their focus to areas less clearly tied to federally authorized fee-setting, such as state tax policy or disclosure requirements. With no other state having yet moved a bill in direct response to the federal orders, the early signal is that many may wait and watch how the Illinois framework fares once its delayed provisions finally collide with the entrenched federal stance.
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.
