Published in CUToday
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The Trump Administration is moving to block Illinois’ swipe-fee law from applying to national banks, adding a major new federal preemption twist to the industry’s already fast-tracked Seventh Circuit appeal and potentially strengthening the broader fight being waged by banks and credit unions against the state’s Interchange Fee Prohibition Act (IFPA).
Bloomberg Law first reported the move, saying the Office of the Comptroller of the Currency on Tuesday filed an interim final rule with the White House that would preempt Illinois’ law for national banks as the appeal continues.
The development comes just two months after CUToday.info reported that Chief U.S. District Judge Virginia M. Kendall largely upheld the core of the IFPA—allowing Illinois to bar interchange on the tax and gratuity portions of card transactions—while striking down the law’s separate data-usage restriction on preemption grounds. In that Feb. 10 ruling, Kendall declined to extend federal preemption to federal credit unions, leaving CUs exposed to the interchange restrictions absent relief from the appellate court.
In February, America’s Credit Unions, the Illinois Credit Union League, and the other plaintiffs filed an appeal with the U.S Court of Appeals for the Seventh Circuit. The IFPA is scheduled to become effective July 1, and would ban financial institutions, including credit unions, payment networks, and other entities, from charging or receiving interchange fees in Illinois on the portion of a debit or credit card transaction attributable to tax or gratuity.