The Office of the Comptroller of the Currency on April 26 issued an interim final rule and an interim final order concluding that federal law preempts the Illinois Interchange Fee Prohibition Act. The interim final order states that national banks and federal savings associations are not subject to and not required to comply with the IFPA. The IFPA prohibits interchange fees on the portion of electronic payment transactions attributable to state and local taxes and gratuities in Illinois. The state law is scheduled to take effect on July 1, 2026.
The OCC's preemption directly contradicts a February 10 ruling by the U.S. District Court for the Northern District of Illinois in Illinois Bankers Association v. Raoul. The district court partially upheld the IFPA, finding the interchange fee prohibition was not preempted by the National Bank Act. By issuing interim final actions rather than standard proposed rules, the OCC bypassed the notice-and-comment rulemaking process. The OCC characterized the IFPA as creating a complex, potentially unworkable, and destabilizing standard for the nation's payment card systems.
The Seventh Circuit Court of Appeals will hear oral arguments on the IFPA appeal in mid-May. A 30-day public comment period on the OCC's interim final actions begins upon publication in the Federal Register. The outcome will shape whether individual states can regulate interchange fees on transactions involving federally chartered banks.