Retailers Oppose OCC Effort to Block Illinois Interchange Fee Reform

The Retail Industry Leaders Association (RILA) on Friday joined the Merchant Advisory Group (MAG) and the National Restaurant Association (NRA) in filing comments opposing two actions by the Office of the Comptroller of the Currency (OCC) that would undermine Illinois' Interchange Fee Prohibition Act (IFPA), a law that prohibits card networks from charging interchange fees on sales taxes and gratuities.

In comments opposing the OCC's Interim Order, RILA, MAG, and the NRA argued that the agency's attempt to preempt the IFPA is legally flawed, unsupported by substantial evidence, and contrary to Congress's clear direction limiting federal preemption of state consumer protection laws. The groups noted that the IFPA applies only to interchange fees on taxes and tips, leaving the vast majority of interchange revenue untouched while providing meaningful relief to merchants and consumers.

The trade associations also opposed the OCC's Interim Rule regarding national bank fees, arguing that it improperly expands federal banking powers by allowing banks to delegate interchange fee-setting to card networks such as Visa and Mastercard while still claiming federal preemption protections. The comments contend that the rule would enable anticompetitive conduct, conflict with existing federal regulations, and unlawfully bypass standard notice-and-comment requirements.

"The IFPA is a modest effort to curb excessive interchange fees. The NBA preserves states' ability to take these modest steps to protect their consumers and merchants," the groups wrote in their comments. "The Interim Order's contrary conclusion is a detriment to NBA preemption law, an unwarranted intrusion on state consumer-protection power, and a blow to merchants and consumers, in Illinois and other states."

The filings are the latest step in retailers' ongoing effort to defend the IFPA against challenges brought by banks and card networks. The law addresses a longstanding practice under which merchants pay interchange fees not only on the value of a purchase, but also on sales taxes and employee gratuities — funds that merchants collect and remit to governments and workers rather than retain themselves.

The Retail Litigation Center has also played a leading role in defending the Illinois law and advancing broader efforts to bring competition and transparency to the payments marketplace. Earlier this year, the Retail Litigation Center urged the U.S. Court of Appeals for the Seventh Circuit to uphold the IFPA and has participated in litigation and regulatory proceedings involving interchange fees and payment card competition nationwide.

Read the comments here: National Bank Non-Interest Charges and Fees and Preempting the Illinois Interchange Fee Prohibition Act.

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Media Contact: press@rila.org

RILA is the U.S. trade association for leading retailers. We convene decision-makers, advocate for the industry, and promote operational excellence and innovation. Our aim is to elevate a dynamic industry by transforming the environment in which retailers operate.

RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $2.7 trillion in annual sales, millions of American jobs, and hundreds of thousands of stores, manufacturing facilities, and distribution centers domestically and abroad.