Merchant Groups Sue Over Federal Swipe Fee Rules
Nine trade associations challenge OCC and NCUA rules as Illinois appeals court rulings invalidating its interchange fee law.
Updated on Nov. 12, 2026 in Banking
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FMI and eight other merchant trade organizations filed two federal lawsuits Thursday in U.S. District Court in Washington, D.C., challenging rules issued earlier this year by the Office of the Comptroller of the Currency and the National Credit Union Administration. The suits come as Illinois Attorney General Kwame Raoul announced plans to appeal rulings that invalidated the state's swipe fee law.
Why it matters
The associations contend the agencies overstepped their authority and violated federal rulemaking requirements, a dispute that could shape whether state limits on card interchange fees can stand. Illinois residents and businesses are directly affected, since the state law would bar card networks from charging interchange fees on sales tax and gratuity portions of transactions.
The Illinois Interchange Fee Prohibition Act's original July 1, 2026 effective date was delayed by one year after legal challenges, and the $500 million annual savings estimate is a projection from merchant groups rather than an independently verified figure. The lawsuits do not yet have rulings on their merits, and the appeal of the Illinois decisions is pending.
The players
Office of the Comptroller of the Currency
The OCC is a federal bureau within the U.S. Department of the Treasury that charters, regulates and supervises national banks and federal savings associations.
National Credit Union Administration
The NCUA is the independent federal agency that regulates, charters and supervises federal credit unions across the United States.
Kwame Raoul
Kwame Raoul is the Illinois Attorney General who announced plans to appeal the court rulings invalidating the state's swipe fee law.
The details
The nine merchant trade organizations filed two lawsuits challenging OCC and NCUA rules that the associations say overstepped the agencies' authority. In February, U.S. District Judge Virginia Kendall rejected arguments that federal banking law preempted the Illinois legislation, but after an OCC interim rule in April, she ruled the state law invalid in June. The NCUA issued a similar rule, and the court expanded its injunction in September.
Timeline
2024: Illinois Interchange Fee Prohibition Act passed.
July 1, 2026: Original effective date of the Illinois law, later delayed by one year.
February 2026: Judge Kendall rejected federal preemption arguments.
April 2026: OCC issued an interim rule.
June 2026: Judge Kendall ruled the Illinois law invalid.
Market Dynamics
The Illinois Interchange Fee Prohibition Act of 2024 is the state-level law at the center of this fight, and the federal OCC and NCUA rules are now the basis on which courts have invalidated it. The new lawsuits test whether federal regulators can preempt state limits on card interchange fees through agency rulemaking.
If the Illinois law takes effect, card networks would be barred from charging interchange fees on sales tax and gratuity portions of transactions, which could affect prices at Illinois businesses. The timing of any final decision remains uncertain while the appeal and lawsuits proceed.
The takeaway
The outcome will determine whether state limits on card swipe fees can survive federal banking rules, a question that matters to merchants and consumers in Illinois and beyond. Businesses and residents should watch the appeal and the lawsuits in D.C. federal court for further developments.
Further reading
For more on the state's approach, see Banking coverage across Illinois.
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Should credit card swipe fees on sales tax and tips be banned?
