Banking and Finance Law Daily Wrap Up, PREEMPTION—Opinions differ on OCC Interchange Preemption Rule, (May 29, 2026)

By Donielle Tigay Stutland, J.D.

Banking and credit union trade groups have sent comment letters in support of the legislation.

In response to the Office of the Comptroller of the Currency (OCC) issuing an interim final order preempting Illinois’ Interchange Fee Prohibition Act, the agency has received comment letters with differing opinions as the comment period due date draws closer. In a joint letter, the Independent Community Bankers of America and many state bankers associations expressed their support of the legislation, whereas Georgetown Law Professor Adam J. Levitin opposing the two OCC actions in an individual comment letter.

Background. In late April 2026, the OCC issued two interim final actions aimed at the Illinois Interchange Fee Prohibition Act, concluding that federal law preempts the state statute as applied to national banks and federal savings associations (OCC Bulletin 2026-17) and separately amending its regulations to clarify that national banks may charge non-interest fees, including interchange fees, regardless of whether those fees are set by the bank or a third party (OCC Bulletin 2026-18). The OCC said both actions are intended to prevent what it described as the imminent destabilizing effects of the Illinois law before its July 1, 2026, effective date. Both interim actions take effect June 30, 2026. (see Banking and Finance Law Daily, Apr. 27, 2026).

The Illinois law bars the charging or receipt of interchange fees on the tax and gratuity portions of payment card transactions and limits how transaction data may be used. In its interim order, the OCC said the National Bank Act preempts the law as applied to national banks and that the Home Owners’ Loan Act does the same for federal savings associations. The agency said the Illinois statute would impose a complex, potentially unworkable regime on OCC-supervised institutions and could force major changes to the national payments system.

ICBA Comments. The Independent Community Bankers of American (ICBA), along with 43 state bankers’ associations, sent a comment letter to the OCC in support of the OCC’s interim final order preempting Illinois’ Interchange Fee Prohibition Act. ICBA offers praise to the OCC in its actions to protect national banks and the uniformity of the U.S. payments system.

The letter offers that “the OCC’s preemption action is firmly grounded in the National Bank Act, and the practical realities of modern payment systems.” The ICBA letter posits that state laws that significantly interfere with national banks’ federally authorized powers (including charging fees and operating payment systems) are preempted. The trade groups suggests that the Illinois law would undermine uniform national standards for banking and payments.

Levitin Comment Letter. Georgetown Law Professor Adam Levitin sent a comment letter objecting to both the proposed regulation of the OCC regarding National Bank Non-Interest Charges and Fees (Docket Number OCC-2026-0430) and the OCC’s Order Preempting the Illinois Interchange Fee Act (Docket Number OCC-2026-0431). Levitin, the Carmack Waterhouse Professor of Law and Finance at Georgetown University Law Center, teaches courses in Financial Regulation and Payment Systems.

Specifically, the professor took issue with the OCC providing only a 30-day comment period (instead of the typical 60 days under Executive Order 12866). Levitin argued that the only reason for this rush is for the rule to go into effect before July 1, 2026, when the Illinois Interchange Fee Prohibition Act goes into effect.

Levitin also raised a constitutional challenge to the legislation, asserting that the proposed rulemaking is also unconstitutional because it violates the principle of the “unitary executive.”

The proposed rule states, “Business decisions regarding non-interest charges and fees permitted under this section should be arrived at by each national bank on a competitive basis and not on the basis of any agreement, arrangement, undertaking, understanding, or discussion with other banks or their officers.” Nowhere, however, does the rule acknowledge that the position of the executive branch of the United States is that interchange fees are not currently set, at least in the debit card market, on a competitive basis. The rule does not state that it preempts the IFPA only in regard to competitively set interchange fees.

Levitin also raised the issue the vagueness of the new “considerations” section and that the rulemaking “floats” without clear legal effect. Levitin also suggested that interchange fees do not comply with either subsection 7.4002(c).

Moreover, Levitin also raises that the OCC had bemoaned the “patchwork effect” of the IFPA, but it is the OCC itself that is adding to the patchwork. Wrote Levitin, “if the IFPA is bad policy, it should be addressed across the board—by Congress—rather than preempted only for a subset of financial institutions.” Levitin concluded that the OCC’s “last-minute proposed rule and order are the result of an emergency of its own creation.”

Comapanies: Alabama Bankers Association; Arizona Bankers Association; Arkansas Community Bankers; California Community Banking Network; Independent Community Bankers of Colorado; Connecticut Bankers Association; Community Bankers Association of Georgia; Florida Bankers Association; Idaho Bankers Association; Community Bankers Association of Illinois; Indiana Bankers Association; Independent Community Bankers of America; Community Bankers of Iowa; Bluegrass Community Bankers Association; Community Bankers Association of Kansas; Louisiana Bankers Association; Maine Bankers Association; Maryland Bankers Association; Massachusetts Bankers Association; Community Bankers of Michigan; BankIn Minnesota; Mississippi Bankers Association; Missouri Independent Bankers Association; Montana Independent Bankers; Nebraska Independent Community Bankers; New Hampshire Bankers Association; New Jersey Bankers Association; Independent Community Bankers Association of New Mexico; Independent Bankers Association of New York State; North Carolina Bankers Association; Independent Community Banks of North Dakota; Community Bankers Association of Ohio; Community Bankers Association of Oklahoma; Oregon Bankers Association; Pennsylvania Association of Community Bankers; Independent Banks of South Carolina; Independent Community Bankers of South Dakota; Tennessee Bankers Association; Independent Bankers Association of Texas; Virginia Association of Community Banks; Community Bankers of Washington; Community Bankers of West Virginia; Wisconsin Bankers Association; Wyoming Bankers Association

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