Examining the nationwide interchange landscape for credit unions

Nearly 400 America’s Credit Unions members heard the latest on the fight to secure the payments system through various interchange proposals Thursday.

Notably, this week, the Illinois General Assembly passed a one-year delay in implementation of the Illinois Interchange Fee Prohibition Act (IFPA). The bill would prohibit the collection of tax/gratuity portions of card transactions in Illinois.

In addition, Colorado saw Gov. Jared Polis veto its interchange bill on Wednesday following unified advocacy from the GoWest Credit Union Association, Colorado credit unions, and America’s Credit Unions.

Since the IFPA was enacted in 2024, the Illinois Credit Union League and America’s Credit Union have worked to prevent the bill from becoming effective. Shortly after it was signed into law, ICUL and America’s Credit Unions filed a legal challenge against the bill.

ICUL secured an initial one-year delay in the effective date in 2025, and this week’s second delay gives additional time for the legal challenge to proceed.

In April, the Office of the Comptroller of the Currency issued interim orders confirming federal law preempts the IFPA. This ultimately resulted in the court this week providing an injunction against the IFPA for banks, out-of-state state-chartered banks, federal savings associations, and payment networks.

“Despite not including credit unions, we view this decision as a positive development,” said ICUL Chief Legal Officer and Senior Vice President of State Advocacy Ashley Sharp “The judge acted in response to the OCC’s action, so there wasn’t necessarily an expectation she would change her ruling to include credit unions. This could pave a path to potential relief if the NCUA acts.”

The NCUA has submitted an interim final rule confirming federal preemption for publication. The legislative delay means the NCUA may adjust its rule prior to publication, America’s Credit Unions Vice President of Policy Operations and Credit Union Engagement Ann Petros said, including issuing a proposed rule instead of an interim final rule since the law will no longer become effective July 1 of this year.

Illinois and Colorado aren’t alone in introducing such bills; America’s Credit Unions has been tracking 21 states or jurisdictions that have introduced similar bills this legislative session, including in New York, Pennsylvania, Massachusetts, and Puerto Rico.

America’s Credit Unions also testified against the Massachusetts bill last month at the request of the Cooperative Credit Union League and will continue to work in partnership with Leagues to protect the interchange system.