Merchants processing card transactions through national banks and federal credit unions will face a single federal standard for interchange fees starting June 30, 2026, after two federal regulators moved this week to block Illinois from capping those charges. The Office of the Comptroller of the Currency issued an interim final rule and a separate interim final order declaring that federal law overrides the Illinois Interchange Fee Prohibition Act. The National Credit Union Administration published a matching rule the same day to close any gap between bank and credit union oversight. Illinois lawmakers, separately, amended Senate Bill 3645 to delay the broader state law’s effective date to July 1, 2027, setting up a year-long standoff between federal preemption and a state legislature that has not abandoned its fee-cap ambitions.
Why the June 30 preemption date changes the fee fight now
The tension is straightforward: two federal agencies say national banks and credit unions can keep charging interchange fees set by card networks, even in a state that voted to restrict those fees. In an OCC news release, the agency’s interim final order specifically concludes that federal law preempts the IFPA’s prohibition on interchange fees applied to tax and gratuity portions of transactions, along with the law’s restrictions on how transaction data can be used. That order takes practical effect on June 30, weeks before any revised state deadline would kick in.
The NCUA acted in parallel to prevent a regulatory split. Its interim rule clarifies that federal credit unions retain authority to charge non-interest charges and fees, including interchange fees. The agency explicitly referenced the OCC’s action, signaling that both regulators view the Illinois law as conflicting with existing federal powers over federally chartered institutions.
For retailers in Illinois, the practical result is that no state-level cap on swipe fees will apply to transactions routed through national banks or federal credit unions after June 30. Card networks such as Visa and Mastercard set interchange rates that flow to issuing banks, and the federal rules confirm those rates remain enforceable regardless of state legislation. Any merchant hoping the IFPA would lower costs on the tax-and-tip portion of a sale will not see relief from federally chartered institutions this year or next.
How the OCC order and Illinois delay collide on the calendar
The timeline matters because two clocks are now running at different speeds. The OCC’s interim final rule and order arrive before the end of June 2026. Illinois lawmakers, through House Amendment 001 to SB 3645, pushed the IFPA’s operative provisions so that Article 150 takes effect July 1, 2027. This is not the first time the legislature adjusted the schedule; Public Act 104-0004 previously amended the IFPA’s effective-date framework, showing a pattern of delay.
The gap between federal preemption on June 30, 2026, and the state law’s new start date of July 1, 2027, creates a full year during which the federal position is the only operative rule for nationally chartered institutions. Even after the state law takes effect next summer, the OCC’s order will still apply to national banks unless a court reverses it or Congress changes the underlying statute. The OCC bulletin on the matter states plainly that “the interim final order concludes federal law preempts the IFPA’s interchange-fee prohibition and transaction-data restrictions,” according to OCC Bulletin 2026-17.
That language leaves little ambiguity about the agency’s position. National banks supervised by the OCC are being told they can continue charging network-set interchange fees on all portions of a transaction, including taxes and gratuities, without regard to the Illinois statute. Credit unions under NCUA oversight received the same assurance through their own rulemaking. For compliance officers, the message is that federal standards remain the primary reference point, and any state-level deviation is, at least for now, legally sidelined.
Whether other states will test federal preemption or step back
The coordinated federal response raises a question that extends well beyond Illinois: will other state legislatures pursue their own interchange fee caps, or will the OCC and NCUA actions discourage them? The hypothesis that federal preemption will push states to abandon or delay fee-cap proposals has real grounding. Any state that passes a similar law targeting nationally chartered banks would face the same preemption argument the OCC just applied to Illinois. Litigating that question in federal court is expensive and uncertain, and the OCC has now created a formal record that other states would need to overcome.
At the same time, the Illinois legislature did not repeal the IFPA. Lawmakers delayed it, which suggests they still intend to regulate interchange fees charged by state-chartered banks and other entities outside federal jurisdiction. The preemption applies only to national banks and federal credit unions, not to state-chartered institutions that do not fall under OCC or NCUA authority. That distinction could matter in states with large state-chartered banking sectors, where a fee cap might survive federal preemption for some portion of the market.
Illinois also signaled that political appetite for swipe-fee regulation remains strong. By moving the effective date instead of abandoning the law, legislators preserved a bargaining chip in future negotiations with financial institutions and merchant groups. Other states watching the confrontation may adopt a similar strategy: pass ambitious fee restrictions, then adjust timing while gauging how aggressively federal regulators assert preemption.
Consumer advocates and merchant coalitions are likely to argue that the OCC and NCUA have tilted the playing field toward large, nationally chartered issuers. From their perspective, a patchwork where only state-chartered banks face caps could push volume toward national players and blunt any intended savings for retailers. Banks and credit unions, by contrast, will emphasize the benefits of uniform national standards and warn that state-level caps could undermine card rewards programs or investment in fraud prevention.
For now, the practical guidance is narrow but consequential. Merchants in Illinois should not expect interchange relief on transactions involving national banks or federal credit unions before, during, or after the newly created one-year gap. State-chartered institutions may still face future constraints if and when the IFPA finally takes effect, but that battle will unfold against the backdrop of entrenched federal preemption. Other states contemplating similar legislation must decide whether to invite the same clash or recalibrate their ambitions to avoid a direct collision with federal regulators who have already shown they are willing to step in.
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.
