Federal Action Shapes Interchange, Data Privacy Policy Landscape

The Office of the Comptroller of the Currency issued an interim final rule and order Friday confirming that federal law preempts the Illinois Interchange Fee Prohibition Act, which is set to take effect July 1. The law would prohibit the collection of interchange fees on the tax and gratuity portions of card transactions in Illinois.

While the OCC action applies to national banks, the decision signals broader implications for credit unions. If state-level interchange restrictions move forward, credit unions could face reduced revenue that supports fraud prevention, card programs, and member services, along with increased compliance challenges from a growing patchwork of state laws.

America’s Credit Unions said the action provides clarity for financial institutions and helps protect the stability of the payments system. President and CEO Scott Simpson said the decision reinforces that states cannot interfere with national bank powers and urged similar action for credit unions from the National Credit Union Administration. The association, along with the Illinois Credit Union League, has filed legal challenges arguing the state law conflicts with federal authority.

At the same time, Congress is working to establish a national framework for consumer data privacy, with the House Financial Services Committee and House Energy and Commerce Committee advancing the GUARD Financial Data Act and the SECURE Data Act, bipartisan proposals that would replace the current patchwork of state privacy laws with a unified federal framework.

Since the Office of the Comptroller of the Currency issued its interim final rule and order on April 24, the legal and regulatory landscape has become more complex. The order, which was formally published in the Federal Register on April 29, confirms that federal law preempts the Illinois statute for national banks and effectively blocks enforcement for those institutions in the near term. At the same time, new federal filings have intensified the dispute, creating a parallel legal track alongside the ongoing appeals case, with arguments scheduled for May 13. The developments leave implementation of the law uncertain and add to broader questions about how interchange policy will ultimately be resolved at the federal level.

Cornerstone members are encouraged to stay engaged as these issues develop in Washington and to connect with the advocacy team to support ongoing federal engagement.