MPC Urges NCUA To Withdraw Illinois Swipe Fee Preemption Rule
By CU Today Staff —
WASHINGTON—The Merchants Payments Coalition (MPC) is urging NCUA to rescind its interim final rule preempting Illinois' Interchange Fee Prohibition Act for federally chartered credit unions, arguing the agency exceeded its authority and adopted the rule without an adequate legal foundation.
In comments filed with the NCUA ahead of Thursday's deadline, MPC said the rule raises "substantial legal and policy concerns," including potential antitrust issues, and should be withdrawn while the dispute is resolved in court.
The NCUA issued the rule in June, concluding the Federal Credit Union Act preempts the Illinois law, which bars interchange fees on sales taxes and tips. The action followed a similar April rule from the Office of the Comptroller of the Currency covering national banks. MPC contends the NCUA's interpretation of federal preemption is overly broad and based on an inaccurate understanding of the payments ecosystem. The group also argued the rule became effective June 30 before the public comment period closed, raising concerns under the Administrative Procedure Act.
MPC further challenged industry claims that separating sales taxes and tips from card transactions is impractical, saying payment networks already transmit the necessary data. It also argued the rule creates competition and antitrust concerns by effectively allowing Visa and Mastercard to establish interchange fees on behalf of federally chartered credit unions, even though the card networks themselves are not entitled to federal preemption protections.
The dispute comes as litigation over the Illinois law continues. A federal judge initially ruled the law was not preempted by federal banking statutes, but later blocked enforcement after the OCC issued its rule. Illinois lawmakers have since delayed implementation of the interchange fee ban until July 1, 2027.
Originally reported by CU Today.