Bank, Credit Union Groups Back NCUA Rule Shielding Interchange Fees From Illinois Law
By CU Today Staff —
WASHINGTON—America's Credit Unions, the Illinois Credit Union League, the American Bankers Association and the Illinois Bankers Association urged the National Credit Union Administration to stand by its interim rule preempting Illinois' interchange fee law, arguing the regulation confirms federal credit unions have broad authority to collect interchange fees and prevents a state-by-state patchwork that would drive up costs for financial institutions and consumers.
In a comment letter filed Thursday, the groups--plaintiffs in the lawsuit challenging the Illinois Interchange Fee Prohibition Act--argue that the rule makes clear:
“Interchange fees compensate card issuers for the integral role they play in every credit and debit card transaction—maintaining accounts, extending credit, authorizing transactions, monitoring for fraud, and otherwise ensuring that the modern payment system functions. Collecting them is therefore an integral part of the provision of payment cards and card processing that the FCUA indisputably authorizes,” the letter reads.
The letter outlines how NCUA’s interim final rule confirms that power, and how confirming preemption provides benefits to credit union members and the economy: “If the IFPA were not preempted, compliance with that law would require sweeping changes to payment card systems… At the end of the day, those and other costs would ultimately be borne by consumers.”
The groups highlight several compliance and liability concerns, and the risk of a patchwork of state laws that would jeopardize national payment systems.
Originally reported by CU Today.