The Defense Credit Union Council isn’t mincing words: proposed interchange fee legislation in Pennsylvania and New York sounds good on paper but could end up being a financial headache for the people it’s supposed to help.
DCUC recently fired off letters to lawmakers in both states asking them to pump the brakes on bills that would reshape how payment networks operate. The concern? These aren’t simple fee adjustments—they’re complex regulatory overhauls that could fragment a national system that currently works pretty seamlessly.
Pennsylvania’s Proposals: More Than Meets the Eye
In Pennsylvania, two bills are making their way through the legislature: HB 2090 and SB 1202. Supporters frame them as straightforward fee relief, but DCUC’s Chief Advocacy Officer Jason Stverak sees it differently.
“These bills are often described as narrow fee-relief measures, but their actual effect is broader: they would impose Pennsylvania-specific operating rules on a national payments system,” Stverak explained.
Here’s what that actually means in practice. The legislation would force changes to payment settlement processes, dispute handling procedures, fee structures, merchant-credit workflows, and even tax documentation. It’s not just tweaking prices—it’s rewiring the plumbing of how transactions work.
The ripple effects could be significant. Credit unions would face new compliance costs while simultaneously losing revenue from card programs. That’s a financial squeeze that typically gets passed along to members through higher fees, reduced rewards programs, weaker fraud protection, or tighter credit availability. Not exactly the consumer-friendly outcome anyone was hoping for.
Military Families Could Feel the Impact
DCUC made a point that hits particularly close to home for defense credit unions: financial stress directly impacts military readiness. They cited Military OneSource and the 2024 Active-Duty Spouse Survey, which found that money worries play a real role in whether servicemembers and their families decide to stay in the military.
When credit unions that serve military communities lose revenue and face higher operating costs, the people relying on those institutions feel it first.
New York Faces Similar Concerns
Over in New York, DCUC is pushing back against S5587A (the Interchange Fee Prohibition Act) and related proposals. Same story, different state.
“These bills would not operate as a simple pricing correction. They would instead impose state-specific operating rules on a national payment system, with material risk for consumers, smaller financial institutions, and military households,” the council warned.
The concern here is about creating a patchwork system. Imagine if every state decided to write its own rules for how credit card transactions work. The result would be a compliance nightmare—different authorization processes, settlement requirements, reconciliation procedures, and data governance standards depending on where a transaction happens.
We’ve Seen This Movie Before
DCUC isn’t just speculating about potential problems. They pointed to actual data and real-world precedents.
The Richmond Fed found that when federal debit interchange regulations kicked in, 75% of merchants reported no price changes whatsoever. Only 2% saw prices actually decrease. So much for the “savings will be passed to consumers” promise.
Then there’s Illinois, which tried something similar. In April 2026, the Office of the Comptroller of the Currency stepped in and determined that federal law preempts Illinois’ interchange law for national banks and federal savings associations. Why? Operational complexity and cost concerns.
The OCC didn’t pull punches in its assessment, warning that multiple state-level carveouts could create a “complex, potentially unworkable, and destabilizing standard” for the payments system. They estimated that financial institutions would face over $232 million in one-time system upgrades, about $145 million annually in manual processing costs for several years, and around $200 million in lost revenue.
That’s not pocket change, and those costs don’t just disappear—they get absorbed somewhere, usually by consumers.
The Bottom Line
Anthony Hernandez, DCUC’s President and CEO (and retired U.S. Air Force Colonel), summed up the organization’s position clearly:
“DCUC will continue forcefully advocating against harmful policies that would weaken the ability of credit unions to serve military families, local communities, and the broader economy, while fragmenting the integrity of the national payments system. Credit unions are mission-driven institutions built to serve people, not shareholders, and lawmakers must ensure public policy strengthens that mission instead of undermining the financial stability, access, and support millions of Americans rely on every day.”
The message to lawmakers is straightforward: well-intentioned legislation can still produce lousy outcomes. Before imposing state-specific rules on a national system, consider whether the cure might be worse than the disease—especially when the evidence suggests similar regulations haven’t delivered on their promises in the past.