NCUA Publishes Rulemaking to Preempt State Interchange Fee Restrictions

The National Credit Union Administration (NCUA) recently issued an interim final rule (IFR) reaffirming that the Federal Credit Union Act grants federal credit unions (FCUs) exclusive authority to assess non-interest charges and fees, including interchange fees. The NCUA’s IFR is designed to directly preempt the Illinois Interchange Fee Prohibition Act (IFPA), which seeks to preclude financial institutions from charging or receiving interchange fees on the sales tax and gratuity portions of payment card transactions.

This rulemaking aligns the NCUA with administrative actions taken by the Office of the Comptroller of the Currency (OCC), which recently issued a similar preemption order for national banks and federal savings associations (see prior WBK coverage).

While the IFR strengthens the legal positioning of federally chartered credit unions, the long-term viability of the Illinois law remains tethered to ongoing federal litigation. The U.S. District Court for the Northern District of Illinois recently issued a permanent injunction blocking the IFPA, but that specific relief primarily covered national banks, out-of-state state-chartered banks, and payment networks.  Ultimately, the federal courts will decide the level of administrative deference owing to both the NCUA and OCC rules. 

The IFR will become effective on June 30, 2026, although interested parties may submit comments on the Federal eRulemaking Portal through July 9, 2026.