The Office of the Comptroller of the Currency (OCC) has bypassed the standard notice-and-comment period to issue an immediate interim final rule which shields the national banking system from localized legislative disruptions by cementing the authority of national banks to collect interchange fees.
In February 2026, an Illinois district court cast doubt on federal preemption regarding the state's Interchange Fee Prohibition Act (IFPA), a law scheduled to ban interchange fees on taxes and gratuities starting July 1, 2026.
Chief Judge Virginia M. Kendall ruled that because networks like Visa and Mastercard set the default swipe fees, national banks are not directly protected by federal banking preemption.
That ruling sent shockwaves through the financial sector, prompting an immediate fast-tracked appeal by the American Bankers Association to the Seventh Circuit.
Instead of risking a fractured market while waiting on the appellate court, the OCC stepped in to rewrite the regulatory definitions and kill the state law from the top down.
The IFPA threatens a $1,000 penalty per transaction. For context, Illinois processes roughly 3.9 percent of the billions of U.S. card transactions annually. The liability risk is existential.
If the law were to take effect unaltered, every point-of-sale system in the state would need to instantly isolate state tax, local tax, and gratuity components at the transaction level before sending the authorization to the card network.
Global accounting firm PwC has already warned merchants that they must rapidly assess whether their enterprise resource planning and tax engines can handle this unprecedented data transmission load.
For many mid-sized retailers and smaller issuing banks, the cost of updating this infrastructure far outweighs the revenue, creating a real threat of localized credit card blackouts.
The updated rule redefines the operational reality of non-interest compensation by explicitly permitting national banks to charge non-interest fees even if those fees are set by, or negotiated in consultation with, third-party networks.
By legally cementing the reality that modern banks rely entirely on third-party networks to maintain global settlement operations, the OCC ensures the protective umbrella of the National Bank Act extends over the entire transaction flow.
The OCC now defines the power to charge as the authority to "directly or indirectly, through intermediaries, partners, payment networks, interchanges, or other third parties, assess, collect, impose, levy, receive, reserve, take, or otherwise obtain..."
To align the regulatory text with modern financial operations, the OCC stripped the word "customer" from the rule's fee-imposition authority, meaning that banks do not need a direct consumer relationship to collect these fees.
This amendment ensures the bank's right to extract interchange revenue remains federally protected regardless of how many intermediaries sit between the terminal and the vault.
While the net captures national banks and officially lists interchange fees as a nonexclusive example of permissible charges, there are distinct carve-outs.
Federal savings associations do not need this new emergency shield. These institutions are excluded from this specific rule, as the OCC interprets 12 CFR 145.17 to already grant them comparable powers.
The rule does not apply to charges levied by a national bank acting in its capacity as a fiduciary, which remain governed strictly by 12 CFR part 9.
Any charges classified as "interest" under 12 U.S.C. 85 are explicitly carved out and governed separately under 12 CFR 7.4001.
This intervention forces a unified national standard right before a fragmented state mandate could freeze point-of-sale systems and trigger widespread transaction declines.
By preemptively crushing the IFPA, the OCC is sending a hostile warning to the more than twenty other state legislatures currently drafting copycat bills.
Main Street merchants will continue to pay full interchange fees on every cent of a transaction, but consumers and issuing banks will be spared the chaos of localized card rejections and the inevitable supply chain disruptions that would follow a fragmented, state-by-state checkout infrastructure.
