On June 8, 2026, the National Credit Union Administration (NCUA) announced the adoption of an Interim Final Rule clarifying the authority of federal credit unions (FCUs) to impose non-interest charges and fees, including interchange fees associated with payment card transactions. The rule, which becomes effective on June 30, 2026, reinforces NCUA’s position that federal law exclusively governs FCUs’ authority to assess such fees and that state laws purporting to regulate those fees are preempted.

It is very unclear, however, whether the courts will defer to the NCUA’s Interim Final Rule, particularly since a court has already ruled on February 10, 2026 that the Federal Credit Union Act itself and the regulations then in effect do not preempt the core provision of the Illinois Interchange Fee Prohibition Act (“IFPA”), 815 ILCS151/150-1 et seq. which bans Issuers, Payment Card Networks, Acquirers, and other transaction processors from receiving from or charging Merchants any interchange fees on the portion of a transaction made up of state and local taxes and gratuities. See Illinois Bankers Association v. Raoul, F.Supp.3d, 2026 WL 371196 (N.D. Ill. Feb. 10, 2026). The Court recently confirmed its Feb. 10 opinion with another opinion on June 1, 2026 with respect to there being no Federal Credit Union Act preemption regarding the core provision of the IFSA banning the charging or receipt of interchange fees on taxes and gratuities.

Background

The Interim Final Rule comes against the backdrop of increasing efforts by some states, most notably Illinois, to regulate interchange fees and other charges associated with payment card transactions. Several states have enacted (e.g., Illinois) or considered legislation restricting the calculation or collection of interchange fees on portions of transactions involving taxes, gratuities, or other components of a purchase.

The NCUA stated that it already views its existing regulations as granting FCUs broad authority to establish and collect non-interest charges and fees, including fees that are established or determined by third parties. Nevertheless, the agency concluded that additional clarification was warranted to eliminate uncertainty and to ensure that FCUs are not placed at a competitive disadvantage relative to national banks. The Interim Final Rule relies on several powers provided in the Federal Credit Union Act, including a FCU’s power to make contracts, the power to make loans and lines of credit, and the exercise of incidental powers.

Key Provisions of the Rule

The Interim Final Rule expressly confirms that:

  • Federal credit unions possess authority under the Federal Credit Union Act to impose non-interest charges and fees, including interchange fees associated with payment card services.
  • The NCUA has exclusive authority to regulate FCUs’ exercise of that power.
  • State laws that attempt to regulate, limit, prohibit, or otherwise affect FCUs’ non-interest charges and fees related to payment card services are preempted and do not apply to FCUs.

The agency emphasized that the rule is intended to clarify existing authority rather than create new powers.

Alignment with OCC Action

The NCUA specifically noted that the rule is intended to avoid disparate treatment between federal credit unions and national banks. The agency’s action follows a recently issued interim final rule by the Office of the Comptroller of the Currency (OCC) addressing the same issue for national banks and federal savings associations.

As readers of this blog may recall, the OCC’s rule reaffirmed that federal banking law preempts state efforts to regulate national banks’ non-interest charges and fees, including interchange fees. By adopting a parallel rule, the NCUA seeks to ensure that federal credit unions enjoy equivalent protection from state regulation.

Significance for Federal Credit Unions

The Interim Final Rule provides important regulatory support for FCUs that issue payment cards or participate in card payment networks. The rule strengthens the legal basis for challenging state laws, like Illinois’s IFSA that seek to regulate interchange fees or otherwise interfere with federally authorized fee structures.

The rule may also influence ongoing policy debates regarding state interchange fee legislation. While states remain free to regulate state-chartered institutions to the extent permitted by federal law, the NCUA has made clear that FCUs operate under a federal regulatory framework that leaves no room for state regulation of non-interest charges and fees related to payment card services.

Looking Ahead

Although the rule takes effect on June 30, 2026, it is being issued as an Interim Final Rule, meaning that the NCUA will accept and consider public comments before issuing a final rule. Given the increasing attention that state legislatures and merchants have devoted to interchange fee regulation, the agency’s action is likely to draw significant interest from credit unions, banks, payment networks, merchants, and consumer advocates.

The NCUA’s action represents another important development in the growing federal-state preemption debate surrounding payment card interchange fees. Together with the OCC’s recent rulemaking, it signals a strong federal regulatory commitment to preserving the ability of federally chartered financial institutions to establish and collect payment card-related fees free from state interference.

It is too early for FCUs to declare victory in Illinois or elsewhere since the only court to consider this preemption issue has determined that there is no preemption. The open question, of course, is whether the District Court (upon reconsideration) or 7th Circuit to which the District Court’s judgment has been appealed will uphold the validity of any final preemption rule which the NCUA issues.

It is true that the District Court, in its June 1, 2026 opinion, upheld the validity of the OCC’s amended regulation and order upon which the NCUA’s Interim Final Rule was based. However, national banks and FCUs powers and preemptive authority are derived from completely different federal statutes. Moreover, the Supreme Court’s Barnett Bank opinion which holds that state law is preempted if it conflicts with or significantly impairs a federally created power under the National Bank Act. The District Court has concluded that the Barnett Bank preemption doctrine does apply to FCUs.