DCUC Urges NCUA to Oppose Illinois Law on Interchange Fees
In a letter sent on Thursday, October 3, 2024, the Defense Credit Union Council, DCUC, urged the National Credit Union Administration, NCUA, to strongly oppose a recently passed Illinois law on interchange fees on taxes and tips.
DCUC expressed concerns that the law, which prohibits credit card companies from charging swipe fees on these transactions, could severely disrupt credit unions’ operations and the financial ecosystem as a whole.
DCUC emphasized the position of the Office of the Comptroller of the Currency (OCC), which has described the Illinois law as “ill-conceived, highly unusual, and largely unworkable.” The OCC’s court filing highlighted that the law risks fragmenting the regulatory environment for financial institutions, including credit unions, which are vital to providing financial services to millions of Americans.
“The law threatens the established framework for interchange fees, which are vital to covering the costs of maintaining secure, reliable payment networks,” wrote Jason Stverak, DCUC Chief Advocacy Officer. “Without these fees, the sustainability of services provided by credit unions could be jeopardized.”
Stverak added how the state-level attempt to regulate interchange fees contradicts federal banking laws and could lead to inconsistent regulations across the country. This could create undue compliance burdens on credit unions and impede their ability to effectively serve their members.
DCUC joins the OCC in advocating for federal preemption to maintain regulatory uniformity on interchange fees, warning that the Illinois law sets a dangerous precedent for other states to enact similarly disruptive regulations.
DCUC urged the NCUA to consider these concerns and align with the OCC’s stance, emphasizing the potential harm to the credit union industry and the broader financial system if the law is not opposed.
