The Illinois Credit Union League (ICUL) today welcomed a significant regulatory action by the National Credit Union Administration (NCUA) that strengthens the legal position of federal credit unions in the ongoing challenge to the Illinois Interchange Fee Prohibition Act (IFPA).
The NCUA’s interim final rule, set for publication in the Federal Register, explicitly affirms that federal credit unions have authority under federal law to assess non-interest charges and fees related to payment card services and that conflicting state laws are preempted. In its rulemaking, the agency specifically cited concerns with laws such as the IFPA, noting that the Illinois law creates "a complex and potentially unworkable standard" and exposes institutions to substantial compliance and liability risks.
"This action represents an important step forward for credit unions and the millions of consumers who rely on electronic payments every day," said Libby Calderone ICUL President/CEO. "The NCUA has clearly recognized the significant operational challenges and legal uncertainties created by the IFPA and has affirmed the federal authority governing payment card programs offered by federal credit unions."
The NCUA's action follows similar regulatory action by the Office of the Comptroller of the Currency (OCC), which earlier this year confirmed federal preemption protections for national banks.
Together, these actions reinforce the industry's longstanding position that Illinois cannot impose requirements that interfere with federally authorized payment card activities.
The regulatory developments come as litigation challenging the IFPA continues. ICUL, alongside America's Credit Unions, the American Bankers Association, and the Illinois Bankers Association, has argued that the law conflicts with federal law and threatens to disrupt the payment systems relied upon by financial institutions, businesses, and consumers.
The legal landscape has continued to shift in recent months. Following the OCC's regulatory action, the U.S. Court of Appeals for the Seventh Circuit remanded portions of the litigation to the district court for further consideration. The U.S. District Court for the Northern District of Illinois subsequently issued a permanent injunction protecting national banks, out-of-state state-chartered banks, federal savings associations, and payment networks from enforcement of the law.
Additionally, the Illinois General Assembly recently approved legislation delaying implementation of the IFPA by one year, moving the effective date from July 1, 2026, to July 1, 2027. The legislation is expected to be signed into law by Governor J.B. Pritzker.
While the courts will ultimately determine the extent to which federal law preempts the IFPA, the NCUA's action provides strong support for the position that federal credit unions should not be subject to Illinois' interchange fee restrictions.
ICUL will continue working with federal regulators, coalition partners, and policymakers to protect credit unions and their members from the harmful consequences of the IFPA. We remain committed to ensuring that Illinois credit unions can continue providing secure, efficient, and affordable payment services without disruption.
