On June 8, the NCUA announced an interim final rule clarifying federal credit unions’ (FCUs’) authority under the Federal Credit Union Act to charge non-interest charges and fees, including interchange fees from credit and debit card operations. The rule states that FCUs may charge such fees even when they are set by, or in consultation with, third parties. The NCUA noted that the rule is intended to preempt state laws affecting non-interest charges and fees related to payment card services, warning that compliance uncertainty could cause FCUs and card networks to decline certain transactions or cause some smaller FCUs to stop offering payment cards altogether. The interim final rule takes effect June 30, and comments are due by July 9.

The rule follows litigation challenging the Illinois Interchange Fee Prohibition Act (IFPA) (previously covered by InfoBytes here), which would, upon taking effect, bar credit card issuers and networks from charging or receiving interchange fees on the tax or gratuity portions of a transaction. As previously covered by InfoBytes, the district court initially held, in relevant part, that NCUA rules did not preempt the IFPA as to FCU credit and debit card interchange fees. The NCUA noted that the OCC recently issued a similar interim final rule and related order addressing national banks and federal savings associations (covered by InfoBytes here) and stated that it consulted with OCC staff and adopted substantially similar language to avoid disparity between federal credit unions and national banks.

The rule adds a new preemption provision to 12 CFR Part 701 that consolidates existing NCUA preemption provisions and expressly provides FCUs with authority to charge non-interest charges and fees. The NCUA issued the rule without prior notice and comment, citing “good cause” based on the timing of the district court decision and the IFPA’s effective date, and stated that current payment card infrastructure does not support the IFPA’s automatic process. The agency noted that, immediately before publication in the Federal Register, the Illinois legislature had voted to delay the IFPA’s effective date by one year to July 1, 2027, but that the delay had not been signed into law when the rule was drafted.