NCUA Provides Key Relief on Illinois Interchange Fee Law

One of the most significant advocacy developments this month came from the National Credit Union Administration's publication of an interim final rule confirming that the Federal Credit Union Act preempts the Illinois Interchange Fee Prohibition Act (IFPA) and similar state laws. Effective June 30, 2026, the rule clarifies that federal credit unions may continue charging non-interest fees related to payment card services and that state laws attempting to restrict those fees are preempted under federal law.

The NCUA's action represents an important step toward preserving a consistent and reliable payments system for credit unions and their members. Since the Illinois law was enacted, credit unions, financial institutions, and trade associations have raised concerns that allowing states to regulate interchange fees independently could create a patchwork of conflicting requirements. Such a framework would increase compliance costs, create operational complexities, and introduce uncertainty into the payments ecosystem.

In issuing the rule, the NCUA acknowledged many of these concerns, noting that the Illinois law creates a complex regulatory structure that could expose financial institutions to significant compliance challenges and liability risks. The agency concluded that federal law provides federal credit unions with the authority to establish and collect fees related to payment card services, reinforcing the long-standing principle of federal preemption.

While litigation surrounding the Illinois law remains ongoing and courts will ultimately weigh in on the broader preemption questions, the NCUA's action provides meaningful clarity and certainty for federal credit unions. It also demonstrates the importance of continued advocacy and engagement on issues that directly affect credit unions' ability to serve their members efficiently and effectively.

Cornerstone will continue monitoring legal and regulatory developments related to interchange fees and will advocate for policies that protect credit unions, reduce unnecessary regulatory burdens, and preserve access to affordable financial services for members across the region.