7th Circuit Vacates Federal Court Ruling That Illinois Ban on Certain Swipe Fees Is Not Preempted

The U.S. Court of Appeals for the Seventh Circuit vacated an Illinois federal court’s ruling that the National Bank Act (NBA) does not preempt an Illinois statute that prohibits charging merchants interchange fees on state and local taxes and gratuities, after the OCC determined that the statute is preempted.

In February 2026, an Illinois federal court ruled that the NBA does not preempt an Illinois statute’s prohibition on charging merchants interchange fees on state and local taxes and gratuities.  In so ruling, the court rejected arguments that the Illinois statute’s prohibition significantly interferes with (or eliminates) a national bank’s power to charge customers non-interest charges and fees and power to process card transactions, receive deposits, and make loans through credit cards.  Because non-bank payment networks — rather than national banks themselves — charge interchange fees, the court reasoned, the Illinois statute does not interfere with a national banking power.  WBK covered that order here.

In April 2026, the OCC issued an interim final rule clarifying the agency’s position that a national bank may charge interchange fees on payment card transactions under its power to charge customers non-interest charges and fees.  Thus, the rule maintained that the NBA preempts the Illinois statute as to national banks because such statute prohibits a national bank from exercising a national banking power.  WBK covered that rule here.

In light of the OCC’s interim final rule, the Seventh Circuit issued a non-precedential dispositive order vacating the Illinois federal court’s ruling and remanding the case to the district court for consideration of such rule.