OCC Doubles Down On Interchange Fee Preemption Against The Backdrop Of High-Stakes Seventh Circuit Litigation And A Post-Loper Bright World

In a pair of coordinated actions on April 24, 2026, the Office of the Comptroller of the Currency (OCC) moved to reaffirm and expand the scope of National Bank Act (NBA) preemption to credit and debit card interchange fees and the use of electronic payment transaction data.

The OCC issued (i) an interim final rule clarifying that interchange fees are protected “non-interest charges,” and (ii) an interim final order expressly preempting the Illinois Interchange Fee Prohibition Act (IFPA). Published in the Federal Register on April 29,2026, comments are due by May 29, 2026 with the interim final rule and interim final order both effective June 30, 2026.

These actions do not occur in a vacuum. Rather, they land squarely in the middle of fast-moving litigation in the U.S. Court of Appeals for the Seventh Circuit and at a time when the Supreme Court has fundamentally altered administrative law through its decision in Loper Bright Enterprises v. Raimondo. 

This post takes a deep dive into those dimensions.

The Seventh Circuit Litigation: A Direct Rejection of Preemption, For Now

The OCC’s actions are best understood as a direct response to an adverse district court ruling now on appeal.

The District Court Decision

In February 2026, Judge Virginia Kendall of the Northern District of Illinois issued a split decision in Illinois Bankers Association v. Raoul.

1. The court upheld the IFPA’s core interchange fee restriction, holding that it is not preempted by the NBA.
2. At the same time, the court enjoined the statute’s data usage limitations, finding those provisions did interfere with federally authorized banking activities.

The court’s preemption analysis is particularly notable. It concluded that the IFPA does not “significantly interfere” with national bank powers because:

1. The law formally regulates payment card networks and merchants, not banks directly; and
2. Interchange fees are set by networks, allowing the state to characterize the law as outside the core of bank powers.

This reasoning effectively narrows the reach of NBA preemption by allowing states to regulate third-party intermediaries, even where those intermediaries are integral to national bank functions.

The IFPA’s Data Usage Restrictions

Separate from the fee prohibition, the IFPA imposed restrictions on how transaction data could be collected, transmitted, stored, and used when a payment card transaction included tax or gratuity information. In substance, the law sought to prevent networks and processors from using or transferring data identifying the tax and tip portions of a transaction except for limited purposes tied to transaction settlement.

Those provisions created substantial operational and compliance concerns because modern card transactions rely on the rapid sharing of data among issuers, acquiring banks, networks, processors, fraud-monitoring vendors, and other service providers.

The district court concluded that these data restrictions were preempted by the NBA because they would significantly interfere with national banks’ exercise of core banking powers. In particular, the court recognized that national banks depend on the ability to use and transmit transaction data for several federally authorized activities, including:

1. Fraud detection and cybersecurity monitoring
2. Transaction authorization and settlement
3. Customer servicing and dispute resolution
4. Regulatory compliance, including BSA/AML obligations
5. Risk management and account administration

By restricting the flow and use of transaction data within the payment ecosystem, the IFPA threatened to impair how national banks operate card programs and manage payment risk. Unlike the interchange fee cap, which the court viewed as an indirect economic regulation, the data restrictions were seen as directly burdening national bank operations themselves.

Accordingly, the district court enjoined enforcement of those provisions while allowing the fee-related portions of the statute to remain in place pending appeal.

The Appeal

The decision has been appealed, and the case is now before the Seventh Circuit on an expedited schedule given the statute’s July 1, 2026 effective date.

A broad coalition of banking and payments groups is seeking reversal and a broader preemption ruling. The appellants argue the IFPA unlawfully restricts how financial institutions receive compensation for banking services, and they are seeking injunctive relief barring enforcement of the interchange provisions. Illinois, for its part, continues to argue that the IFPA does not meet the Barnett Bank “significant interference” standard.

The appeal presents two broader questions of importance to national banks:

1. Can a state evade NBA preemption by regulating payment networks (or other similarly situated third parties) rather than the bank itself?
2. When does a state data-governance law impermissibly interfere with national bank operations?

Why the OCC Intervened

The OCC already filed an amicus brief in the Seventh Circuit and its new rule and order go even further. They effectively reject the district court’s core premise, asserting that:

1. Interchange fees are a core banking function, and
2. State limits on those fees necessarily interfere with national bank powers, regardless of who establishes or pays the fees. 

In that sense, the OCC’s actions are not merely interpretive, they are an attempt to reshape the legal framework the Seventh Circuit will apply.

The OCC’s Non-Interest Fee Regulation: Origins, Scope, and Rationale

Section 7.4002 was finalized in 2001 as part of a broader modernization of OCC rules addressing national bank powers and preemption. The rule authorizes national banks to charge “non-interest charges and fees.”

While it expressly references deposit account service charges, the rule was intentionally broad and not limited to a closed list of fees. Historically, it has been applied to maintenance fees, overdraft fees, ATM fees, and service charges associated with banking products and services.

The OCC’s current action provide additional detail elements to assessing the permissibility of fees and expressly references interchange fees as an example of the types of fees that are permitted.

What Was the OCC’s Legal Rationale?

The OCC grounded the rule in:

1. 12 U.S.C. § 24 (Seventh)
2. Incidental powers necessary to conduct the business of banking

The agency reasoned that a bank’s ability to price its services and charge non-interest charges and fees, whether through direct bilateral agreements or indirect networks, and whether charged to customers or other non-customer third parties, are integral to offering banking products and operating competitively in national markets.

Does It Automatically Preempt All State Laws Governing Bank Fees?

No. While preemption still turns on whether a state law prevents or significantly interferes with a national bank’s authorities under Barnett Bank and Dodd-Frank § 25b, the interim final rule intends to resolve any ambiguity by stating that:

1. Non-interest charges and fees that a national bank may “charge” include any effort to “assess, collect, impose, levy, receive, reserve, take, or otherwise obtain, including through a fee sharing or similar relationship;”
2. These powers exist “regardless of which entity sets the amount of the non-interest charge or fee or exactly how the national bank obtains the charge or fee;” and
3. That non-interest charges and fees may be paid to the bank by a customer directly “or via a third party that may not have a ‘customer’ relationship with the bank.”

The interim final rule includes interchange fee restrictions as an example that meets these standards. These principles, however, can be applied to additional non-interest charges and fees as well. For example, fees imposed by banks in connection with third party requests for data access under Section 1033 of Dodd-Frank, which are expressly prohibited by the CFPB’s existing rules, might fit within these contours.

Judicial Deference After Loper Bright Enterprises: A Much Harder Road for the OCC

The End of Chevron Deference

In Loper Bright Enterprises v. Raimondo (2024), the Supreme Court held that courts must exercise independent judgment in interpreting statutes and may not defer under Chevron.

That means courts will independently determine:

1. Whether interchange fees fall within protected national bank powers;
2. Whether the IFPA significantly interferes with those powers; and
3. Whether the OCC’s interpretation, in its interim final rule and order, is persuasive.

What Deference Remains?

The OCC may still receive:

1. Skidmore respect based on expertise, consistency, and reasoning.
2. Consideration because Congress assigned the OCC a formal role in NBA preemption determinations under Dodd-Frank.

But those factors do not bind courts.

Practical Effect Here

The Seventh Circuit may consider the OCC’s rule and order seriously, but it is free to reject them. In prior eras, these OCC pronouncements might have carried stronger presumptive weight. After Loper Bright, they are arguments, not commands.

Key Takeaways

1. The OCC is attempting to reframe the Seventh Circuit appeal in real time.
2. The district court drew a sharp distinction between economic regulation and operational interference. It tolerated the former but enjoined the latter.
3. The data-usage ruling may prove especially significant because it signals that courts remain receptive to preemption where state laws disrupt payment processing, fraud controls, or compliance systems.
4. The ultimate decision now rests with the judiciary, not the agency.

Conclusion

The OCC’s twin actions represent one of the most aggressive assertions of federal preemption in the payments space in years. Yet their practical impact will depend on how the Seventh Circuit evaluates both the fee restrictions and the data-governance provisions of the IFPA.

At stake is not just the Illinois law, but a larger question increasingly central to modern banking law: who controls the rules of the digital payments system, the states, federal regulators, or the courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.