OCC Asserts Federal Preemption over Bank Interchange Fees

The OCC issued an interim final rule and an interim final order - asserting that federal law preempts the Illinois Interchange Fee Prohibition Act ("IFPA") from prohibiting banks and card networks collecting interchange fees on the tax and gratuity portions of card transactions.

In the interim final rule, the OCC clarified that "national banks’ power to charge non-interest charges and fees includes the power to assess, collect, impose, levy, receive, reserve, take, or otherwise obtain non-interest charges and fees, including interchange fees from credit and debit card operations." The OCC also stated that "national banks may charge non-interest charges or fees, even when such charges and fees are set by or in consultation with third parties."

In the interim final order, the OCC found that the IFPA, which purports to (1) prohibit national banks and Federal savings associations from charging or receiving interchange fees on the tax and gratuity portions of payment card transactions; and (2) restrict the use of payment card transaction data, was preempted under the National Bank Act - and under the Home Owners' Loan Act for federal savings associations - because it restricts bank flexibility, undermines efficiency, and imposes unusual qualifications on federally granted powers." I

The OCC said the interim final order is effective on June 30, 2026, (one day before the IFPA was set to take effect.) The interim final rule is effective June 30, 2026 with comments due within 30 days of publication in the Federal Register.