The Office of the Comptroller of the Currency is moving on two fronts to reshape how exchanges are managed in the United States, thrusting federal oversight into a battle that began in Illinois but will not last there.
In March, the O.C.C An amicus brief in the Seventh Circuit’s appeal of Illinois’ interchange fee ban, siding with the bank plaintiffs and urging the court to reverse key portions of the lower court’s ruling. Last week, it advanced a regulatory path, presenting A Rulemaking element Concerning non-interest and federal audit fees. Details of this rule have not yet been published. The Illinois law is scheduled to take effect July 1.
The fault line between the federal state
The Illinois law seeks to prohibit interchange collection on portions of transactions associated with taxes and tips, requiring merchants and processors to isolate those elements at the transaction level. The OCC’s position positions this requirement as an infringement on the authorities granted to national banks under federal law.
Because the Securities Harmonization Office supervises national banks, its position has direct operational implications for issuers. The court file confirms to the agency This exchange is embedded in the structure that supports lending, deposit services and transaction processing. The issue before the court therefore extends beyond fee mechanisms and relates to whether the state is able to impose changes to how transactions are structured and priced.
What Illinois is trying to change
The Illinois law provides a targeted amendment with broader consequences. By excluding taxes and gratuities from interchange calculations, it changes how the total transaction value is determined for fee purposes. This change requires merchants to identify and transport these components separately, and requires payment systems to recognize and treat them as distinct elements.
The OCC summary states that the Illinois law represents “improper and undeniable state interference with federally chartered banking powers.” He also warns that compliance will require significant operational changes across institutions, including modifications to systems that currently treat transactions as consolidated amounts. Elsewhere, with regard to the economy, last week The Federal Reserve Bank of St. Louis estimated that US banks collected $66 billion in interchange fees, or so-called “drag” fees, in 2025. This latest number indicates an increase from the $64 billion in 2024 and the $52 billion recorded in 2021.
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The OCC argues that focusing on the party that formally defines the exchange ignores the broader relationship between issuing banks and payment networks. In her view, reliance on third-party networks does not diminish the federal authority that supports the provision of card services.
“The power to impose and collect fees, and not just to set their amount, are express prerogatives of national banks that the IFP seeks to inappropriately restrict,” the brief asserts.
National or state-specific rules
The case has implications that extend far beyond Illinois. Legislative proposals in other states such as Colorado and Delaware suggest that similar approaches to exchange could follow, raising the possibility of disparate rules across jurisdictions.
If Illinois’ framework is upheld, financial institutions will need to adapt their systems to accommodate the state’s fee calculations. This will include changes to transaction routing, data segmentation, and settlement processes, all of which currently rely on a standardized transaction across markets.
The different result is that the exchange is subject to federal standards and network rules. In that environment, institutions will continue to process transactions with consistent fee structures regardless of location, while maintaining interoperability across the payments ecosystem. OCC filings confirm that this consolidation supports efficiency and stability in the delivery of banking services.
The schedule remains compact. The appeals court is expected to hear the case before the law takes effect on July 1, creating a near-term decision point for the industry.
