Two interim final actions aimed at preempting an Illinois statute governing non-interest charges and fees, including interchange fees on the tax and tip portion of credit card transactions, were issued by the national bank regulator with an effective date of June 30.
In an interim final order, the Office of the Comptroller of the Currency (OCC) said federal law preempts the Illinois Interchange Fee Prohibition Act, “which purports to (1) prohibit national banks and Federal savings associations from charging or receiving interchange fees on the tax and gratuity portions of payment card transactions; and (2) restrict the use of payment card transaction data.”
Financial trade groups have challenged the Illinois law, and a federal district court, the OCC said, “created ambiguity about the scope of § 7.4002, asserting that national banks do not ‘set’ interchange fees and finding that ‘[t]he thrust of 12 CFR 7.4002 is not to protect fees centrally established by a third-party company.’” (12 CFR 7.4002 is the federal statute governing banks’ authority to impose charges and fees.)
The OCC also issued an interim final rule described as complementary to the order, seeking to clarify that national banks’ power to charge non-interest charges and fees “includes the power to assess, collect, impose, levy, receive, reserve, take, or otherwise obtain non-interest charges and fees, including interchange fees from credit and debit card operations.” It adds that national banks may charge non-interest charges or fees, even when such charges and fees are set by or in consultation with third parties.
The interim final rule and interim final order were announced by the OCC Friday. While set to take effect June 30, they will be out for comment for 30 days after their publication in the Federal Register.
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