Co-Plaintiffs Commend NCUA Interim Final Rule Affirming Federal Credit Unions’ Power to Collect Interchange Fees

In a comment letter filed Thursday, America’s Credit Unions, the Illinois Credit Union League, American Bankers Association, and Illinois Bankers Association offer strong support for the National Credit Union Administration’s (NCUA) interim final rule on preemption related to federal credit unions’ non-interest charges and fees.

The groups are plaintiffs in the lawsuit challenging the Illinois Interchange Fee Prohibition Act. In the letter, they argue that the rule makes clear:

1. Preemption of state laws purporting to limit or affect the conditions of federal credit union loans and lines of credit is not limited to charges to members; and
2. Federal credit unions enjoy broad authority to charge and receive non-interest charges and fees, including interchange fees for credit- and debit-card processing.

“Interchange fees compensate card issuers for the integral role they play in every credit and debit card transaction—maintaining accounts, extending credit, authorizing transactions, monitoring for fraud, and otherwise ensuring that the modern payment system functions. Collecting them is therefore an integral part of the provision of payment cards and card processing that the FCUA indisputably authorizes,” the letter reads.

The letter outlines how the NCUA’s interim final rule confirms that power, and how confirming preemption provides benefits to credit union members and the economy.

“If the IFPA were not preempted, compliance with that law would require sweeping changes to payment card systems… At the end of the day, those and other costs would ultimately be borne by consumers.”

The groups highlight several compliance and liability concerns, and the risk of a patchwork of state laws that would jeopardize national payment systems.

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