May 28, 2026
Jonathan V. Gould
Comptroller of the Currency
Office of the Comptroller of the Currency
400 7th Street SW
Washington, DC 20219
RE: OCC-2026-0430 — National Bank Non-Interest Charges and Fees
RE: OCC-2026-0431 — Order Preempting the Illinois Interchange Fee Prohibition Act
Dear Comptroller Gould:
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write in support of the Office of the Comptroller of the Currency’s interim final rule and interim final order regarding the Illinois Interchange Fee Prohibition Act (IFPA). These actions clarify that federally regulated banks may continue to operate under uniform national standards for non-interest charges and payment card activities, rather than navigating a patchwork of state regulations.
At NTU, we approach these issues from a taxpayer and small-business perspective first. While the IFPA is often discussed as a dispute over interchange fees, the practical consequences reach far beyond the financial sector. Laws like this affect whether payment systems remain simple, reliable, secure, and affordable for the millions of Americans and small businesses that rely on them every day. For taxpayers and consumers, the question is not whether a state legislature can make a fee sound unpopular, but whether political intervention will genuinely lower costs or merely shift them, increase compliance burdens, and make commerce more expensive and unpredictable.
The modern payment system works because transactions are processed through a nationally integrated network governed by consistent rules and standards. The Illinois law threatens to undermine that framework by imposing state-specific operational mandates that are extraordinarily difficult to implement in practice.
Supporters of the IFPA often describe it as a narrow policy change involving sales taxes and interchange calculations. In reality, the law would require payment systems to isolate and process portions of transactions differently in real time depending on the state-specific treatment of taxes and gratuities. That may sound straightforward in theory, but it is far more complicated operationally.
A card transaction is not a paper receipt passed across a counter. It is a rapid electronic process involving merchants, banks, card networks, processors, software vendors, fraud controls, data rules, and settlement systems. A state mandate that appears simple on paper can become highly disruptive when applied to this complex infrastructure.
Small businesses do not experience these mandates as abstract regulatory debates. They experience them as software updates, compliance headaches, vendor uncertainty, system reconfigurations, and additional costs layered into already complex payment systems. Large corporations may have teams of lawyers, compliance officers, and technology staff to absorb fragmented state mandates.
Many independent businesses, restaurants, retailers, and local operators do not have these resources, nor do their customers. Increased compliance costs often result in higher prices, reduced service, fewer payment options, or more complicated checkouts. NTU is concerned that policies intended to help small businesses may ultimately impose new burdens on them.
The broader concern is what happens if Illinois becomes the model for other states. A growing patchwork of differing interchange mandates, exemptions, routing rules, and transaction-processing requirements would create significant operational instability across the national payments system. Consumers and small businesses benefit when payment networks function consistently across state lines. Fragmentation threatens that predictability. For small firms operating online, near state borders, with national vendors, or serving traveling customers, inconsistent state rules would be especially costly. A payment system that varies by state increases compliance costs and limits practical choices.
Congress established the national banking framework specifically to avoid this kind of inconsistent state interference with federally authorized banking powers. Under the National Bank Act, national banks are federally authorized to engage in payment processing and establish non-interest fees as part of their operations. As the Supreme Court recognized in Barnett Bank of Marion County, N.A. v. Nelson, states may not “prevent or significantly interfere with” the exercise of those powers. The IFPA crosses that line by attempting to impose operational restrictions that interfere with how federally regulated banks and payment networks process transactions.
The OCC’s interim final rule appropriately clarifies that national banks’ authority to charge non-interest charges and fees includes the authority to receive interchange fees from credit and debit card operations, even when those fees are set by or in consultation with third parties.
The OCC’s actions also appropriately recognize the broader constitutional concerns raised by the Illinois law. Payment systems operate across state lines and serve as a critical component of interstate commerce. Allowing individual states to impose conflicting transaction-processing mandates risks disrupting the nationally integrated financial infrastructure that Congress sought to protect through federal banking law and its Commerce Clause authority. National uniformity in payments protects consumers and taxpayers. It keeps commerce efficient, reduces duplicative compliance costs, and prevents states from exporting regulatory burdens nationwide.
The OCC’s coordinated actions help preserve the nationally uniform framework that consumers, taxpayers, and small businesses depend on every day. NTU supports the agency’s efforts to prevent operational fragmentation that would ultimately increase costs, complexity, and uncertainty throughout the payments ecosystem. The interim final order correctly concludes that federal law preempts the IFPA and that national banks and federal savings associations are neither subject to nor required to comply with the state law. The order says the IFPA purports to prohibit national banks and federal savings associations from charging or receiving interchange fees on tax and gratuity portions of payment card transactions and to restrict the use of payment card transaction data.
There is also an important taxpayer protection principle at stake here. Policymakers should be cautious about pursuing politically appealing regulatory interventions that seem simple but can create substantial unintended consequences beneath the surface. The payments ecosystem is deeply interconnected. Attempting to micromanage transaction structures at the state level risks disrupting systems that Americans rely on every day for payroll, banking, commerce, and financial security. States should not use the national payments system for symbolic price controls or tax carveouts. If lawmakers wish to reduce tax burdens, they should lower taxes directly, not require payment networks to redesign national systems around state-specific tax policies.
This distinction is important. States can directly cut sales tax rates, simplify tax codes, or reduce regulatory costs for local businesses. These are transparent and accountable actions. In contrast, the IFPA seeks to provide relief indirectly by dictating how federally regulated payment systems handle private transactions. This approach is less transparent, more legally uncertain, and more likely to generate costs ultimately borne by consumers and small businesses.
NTU appreciates the OCC’s leadership in protecting the integrity of the national banking system and preserving a consistent regulatory framework for interstate commerce and payments processing. We respectfully urge the OCC to finalize and uphold these actions to preserve national uniformity, prevent operational fragmentation, and protect taxpayers, consumers, and small businesses from the hidden costs of unworkable payment mandates.
Thank you for the opportunity to comment.
Sincerely,
Jessica Ward
Senior Director of State Affairs
National Taxpayers Union