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| OCC’s preemption of IFPA protects Integrity of Payments System |
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In new comment letters filed Friday, America’s Credit Unions and the Illinois Credit Union League (ICUL) joined the Illinois Bankers Association and American Bankers Association in strong support for the Office of the Comptroller of the Currency’s (OCC) recent actions preempting the Illinois Interchange Fee Prohibition Act. The OCC’s actions eliminate “any possible doubt that the [IFPA] is an unlawful encroachment on the uniform national banking and payments system,” the letters read.
The groups applaud the OCC for making clear that the Illinois law is preempted under federal law. They note that interchange fees compensate issuers for administering credit and debit accounts, authorizing transactions, monitoring for fraud, and supporting other services that enable card-based payments to function smoothly and securely.
“The Associations appreciate this prompt action to preserve regulatory clarity, protect the integrity of the national banking and payments system, and prevent harmful fragmentation of the payments ecosystem,” the letter states.
Allowing the Illinois law to take effect would impose sweeping operational and compliance burdens, forcing stakeholders to attempt to replace a nationally uniform payments system with a fragmented patchwork reflecting jurisdiction-specific rules. The letters also note that similar legislation is under consideration in more than 25 other states and caution that additional state-by-state requirements would magnify costs and risks for financial institutions, merchants and consumers nationwide.
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