OCC actions confirm federal law preempts IFPA

The Office of the Comptroller of the Currency (OCC) issued an interim final rule and interim final order on Friday, confirming that federal law preempts the Illinois Interchange Fee Prohibition Act (IFPA). Over the weekend, the Illinois General Assembly approved a one-year delay in implementing the IFPA, moving it to July 1, 2027. 

The bill would bar the collection of interchange fees for tax and gratuity portions of card transactions in Illinois. America’s Credit Unions has engaged the administration and NCUA on the need for a similar rule for credit unions.

“We appreciate the OCC formally clarifying federal preemption to protect financial institutions and consumers from the harmful effects of this misguided Illinois law. With the clarity that states cannot interfere with national bank powers, Americans are also protected from other efforts that would undermine the safety and stability of the payments system,” said Scott Simpson, America’s Credit Unions president/CEO. “Based on the Federal Credit Union Act and credit unions' status as federal instrumentalities, federal credit unions should also be preempted from the IFPA and any other state law that encroaches against these national authorities. We are confident the NCUA will continue its leadership to provide similar clarification for credit unions and their millions of members.”

America’s Credit Unions and Illinois Credit Union League have made several legal filings demonstrating how the rule illegally encroaches on federal law, and will continue to engage with the NCUA, White House, and Treasury on the negative impacts this law could have on credit unions and consumers across the country. The lawsuit challenging the law is currently before the U.S. Court of Appeals for the 7th Circuit.