Dive Brief:
- FMI – The Food Industry Association “condemned in the strongest terms” the Office of the Comptroller of the Currency’s issuance of two interim final rules that override Illinois’ interchange fee law and prohibit other states from enacting similar legislation, according to a Friday press release.
- This action by the OCC, which is part of the Treasury Department, came after the Trump administration said it was considering an executive order to preempt the Illinois Interchange Fee Prohibition Act, which was set to take effect in July, sister publication Payments Dive reported.
- FMI President and CEO Leslie G. Sarasin called the OCC’s decision “incredibly shortsighted,” noting that grocers and consumers are burdened with paying credit card swipe fees just because they are a “pass-through agent for state and local government taxes.”
Dive Insight:
The Illinois Interchange Fee Prohibition Act prohibits credit card swipe fees on state and local sales and excise tax and gratuities portion of any sale in the state, FMI wrote in its Friday press release, noting that other states are considering similar legislation.
Though the Trump administration is looking to halt the reform law, Sarasin argues that the OCC’s move “flies in the face” of President Donald Trump’s affordability agenda, which includes his endorsement of the Credit Card Competition Act that would mandate network competition in the credit card market to lower interchange fees.
“At a time when the largest banks and credit card networks are pulling in record profits on the backs of grocers, main street businesses and millions of American consumers through credit card swipe fees, it is incredibly shortsighted that the OCC banking regulators chose to pursue an opaque end-run around state lawmakers and the Courts at the behest of the credit card networks and the nation’s largest banks,” Sarasin said.
The Illinois law has been controversial since Democratic Gov. JB Pritzker signed it two years ago, Payments Dive reported. Banks that issue credit cards sought in court to block the law from going into effect, while merchants have praised the law as much-needed relief.
