ICBA, state groups support OCC preemption of Illinois interchange law

ICBA and 43 state banking associations said they support an OCC order preempting the Illinois Interchange Fee Prohibition Act.

Details: In a joint letter to the OCC, the groups said:

• The OCC’s interim final order correctly concludes that federal law preempts the IFPA as applied to national banks.

• The OCC’s preemption action is firmly grounded in the National Bank Act and the practical realities of modern payment systems.

• The IFPA, if allowed to take effect, would pose serious risks to the efficiency, safety, and uniform national standards of the card payment system.

• The OCC should promptly finalize the order to provide lasting regulatory card payment certainty.

Background: The OCC last month issued an interim final rule and interim final order clarifying longstanding powers under federal law for national banks to charge certain fees, preempting a pending Illinois law that restricts interchange fees. Scheduled to take effect on July 1, the IFPA would prohibit the application of interchange fees on the tax and tip portion of a transaction.

Resource for Community Bankers: ICBA in February unveiled an Interchange Guide that breaks down payment card interchange and other swipe fees so community bankers can communicate about the issue with their customers.