A group of nine merchant trade associations filed a pair of lawsuits today against the Office of the Comptroller of the Currency and the National Credit Union Administration, challenging the agencies’ preemption of the Illinois Interchange Fee Prohibition Act, or IFPA.
Since 2024, the American Bankers Association along with the Illinois Bankers Association, America’s Credit Unions and the Illinois Credit Union League, have been challenging the state law in court. IFPA attempted to prohibit banks and payment networks from charging or receiving interchange fees in Illinois on the portion of a debit or credit card transaction attributable to tax or gratuity.
In June, a federal district court issued a permanent injunction barring enforcement of IFPA on most banks after the OCC issued an interim final rule confirming the longstanding national bank powers under federal law to charge certain fees, regardless of whether those fees are set by the bank or a third party. The OCC also released an interim final order asserting that federal law preempts IFPA. The NCUA followed with a similar interim final rule asserting federal preemption of IFPA. In September, the federal court expanded its injunction to include federal credit unions.
ABA and its co-plaintiffs issued a statement following the news of the merchants’ lawsuits.
“We’re disappointed but not surprised by the merchants’ lawsuits, which seek only to undermine the nation’s trusted and tested payments system,” the group of co-plaintiffs said. “Federal law governs the powers of federally chartered banks and credit unions. As one federal court has already determined, the OCC and NCUA acted to affirm the longstanding supremacy of federal law over intrusive state regulations like the IFPA and prevent a patchwork of conflicting state requirements that would create payment chaos and uncertainty. We appreciate the willingness of these agencies to protect consumers and businesses and defend the national payment system that helps drive the U.S. economy forward every day. We look forward to the court affirming their actions.”
