Merchants File Lawsuits Challenging ‘Slapdash’ OCC and NCUA Rules Endorsing ‘Collusive’ Credit Card Fees

• November 12, 2026

Washington, D.C. - A group of merchant trade associations today filed a pair of lawsuits challenging actions taken by the Office of the Comptroller of the Currency and the National Credit Union Administration earlier this year that try to block Illinois' first-in-the-nation law banning credit and debit card swipe fees on sales tax and tips from taking effect.

"The interim rule purports to determine that the National Bank Act protects national banks' ability to receive interchange fees established by payment card networks, even when those fees are set centrally and non-competitively by the networks rather than by the banks themselves, are charged to merchants and not bank customers, and are much higher than the amount necessary to compensate banks for their highly profitable credit card practices," the lawsuit against the OCC said. "But nothing in the National Bank Act - or in the OCC's poorly reasoned, slapdash rule - authorizes such collusive and excessive fees on merchants that have no banking relationship with the financial institution charging those fees."

The suit said interchange "swipe" fees set by card networks to process transactions, which total nearly $200 billion a year nationwide and are 10 times rates charged in Europe, are "ultimately reflected in the prices consumers pay," leaving consumers "stuck with the bill for interchange fees while the issuing banks receive immense profits." The Illinois law, which was set to take effect July 1 but was delayed a year after legal challenges, would save Illinois merchants and their customers more than $500 million per year.

Swipe fees on sales tax and tips "are particularly unfair" because merchants don't get to keep those funds, the suit said. And the delay means merchants and consumers "will be charged hundreds of millions of dollars more" in swipe fees in the meantime.

The OCC lawsuit and a similar suit against the NCUA were filed in U.S. District Court in Washington, D.C., by the National Association of Convenience Stores, the National Retail Federation, the Retail Industry Leaders Association's Retail Litigation Center, FMI - the Food Industry Association, the National Restaurant Association's Restaurant Law Center, the National Grocers Association, the Illinois Retail Merchants Association, the Illinois Fuel and Retail Association and the Illinois Restaurant Association.

The lawsuits are the latest litigation over Illinois' Interchange Fee Prohibition Act, which was passed in 2024. This February, U.S. District Judge Virginia Kendall rejected banks' arguments that the law was preempted by the National Bank Act, saying swipe fees are set by card networks like Visa and Mastercard, and that they are not subject to banking laws because card networks are not banks. Banks appealed that ruling, but while the case was on appeal, the OCC issued a rule in April attempting to say that the NBA preempts state laws from applying to nationally chartered banks even when the banks collude by charging fees set by a third party.

The 7^th U.S. Circuit Court of Appeals then sent the case back to Kendall, and in June she ruled against the Illinois law, citing the OCC rule. The NCUA issued a similar rule in June to try to make the Federal Credit Union Act preempt the Illinois law and similar laws from applying to federal credit unions. In September, Kendall expanded her injunction against the law to include those institutions. Last month, Illinois Attorney General Kwame Raoul announced that he would appeal both rulings.

The merchant groups' first lawsuit said the OCC rule "is based on a flawed legal interpretation of OCC powers, of national bank powers, and of preemption under the National Bank Act." The Illinois law applies only to swipe fees set by card networks rather than by banks and "targets the business of card networks rather than the business of banking."

By issuing the rule and order in "interim final" form rather than as a "proposed" rule and doing so "without notice" just weeks before it was to take effect rather than the typical practice of providing months for response from affected groups, the OCC "unjustifiably" violated Administrative Procedure Act requirements for "notice and comment" before making a rule final, the suit said.

The suit said the OCC "has a history of favoring financial interests by purporting to preempt state attempts to protect their constituents" and cited a number of cases in which courts have overturned its preemption moves, including one that said "questions have repeatedly been raised about OCC's independence from the banks it oversees."

The second lawsuit made similar points about the NCUA rule, calling it, too, "poorly reasoned" and "slapdash." It said "nothing" in the Federal Credit Union Act preempts the Illinois law and that the agency similarly exceeded its authority and violated the APA's requirements for notice and comment.

Below are quotes from participating associations:

FMI - The Food Industry Association President and CEO Leslie G. Sarasin
"Grocery shoppers are already watching every dollar at the checkout, and every added cost in the system matters. Grocers should not be charged swipe fees on sales tax and tips - money they collect and pass through in full to governments and employees and do not keep as revenue. Ending these fees helps ensure more of every dollar spent at the grocery store goes toward keeping prices for food and essential household needs as low as possible."

Illinois Fuel and Retail Association CEO Nate Harris
"Every time an Illinois customer swipes a card, the financial institutions take a cut of the sales tax on that purchase. For a family-owned store, those fees add up to thousands of dollars a year paid on money that was never theirs. Every month this law sits on hold, Illinois retailers and their customers pay more for nothing. It's time to let the law work."

Illinois Restaurant Association President and CEO Sam Toia
"Illinois restaurants are working on the thinnest of margins, and rising costs aren't letting up. Our legislature passed the Interchange Fee Prohibition Act to give operators a break on swipe fees charged on money that isn't theirs: the sales tax they send to the state and the tips they pass to their employees. The OCC and NCUA's rules took that relief away from the small and independent restaurants that need it most. These businesses and the workers they employ deserve a fighting chance."

Illinois Retail Merchants Association President and CEO Rob Karr
"After Illinois' Interchange Fee Prohibition Act was initially upheld by the courts, banks, credit card companies and processors attempted an end run around legislators and the courts in an attempt to protect their ability to unilaterally impose fees on consumers and businesses. Today's action highlights serious concerns about the action of federal regulators while reaffirming our commitment to pursue meaningful swipe fee relief for consumers, neighborhood retailers, restaurants and bars struggling with affordability."

National Association of Convenience Stores General Counsel Doug Kantor
"These lawsuits show that the OCC and NCUA ignored the law and didn't have the authority to do what they did. The OCC and NCUA's rushed rewrites of federal regulations are not legitimate. The court should agree and help protect consumers and small businesses from the huge fees that the credit card industry is extracting from them every day."

National Grocers Association President and CEO Greg Ferrara
"Independent grocers operate on razor-thin margins, and every dollar lost to excessive credit card swipe fees is a dollar that could otherwise go toward keeping groceries affordable, investing in employees and serving local communities. NGA has long advocated for meaningful swipe fee reform, and Illinois took a commonsense step toward protecting Main Street businesses from paying fees on sales taxes and gratuities. The OCC and NCUA sidestepped the law to protect bank and credit union profits, and we're asking the court to uphold Illinois' law and protect the independent grocers and communities that bear the burden of excessive swipe fees."

National Retail Federation Senior Vice President and General Counsel Marissa Bostick

"A federal judge ruled nearly a year ago that federal banking law doesn't preempt Illinois' swipe fee law. But rather than accept a court ruling they didn't like, the banks and credit unions ran to regulators in Washington who tried to undo that decision without giving the public a chance to weigh in. This is about more than one state law. It's about whether federal agencies can override state legislatures just to protect bank and credit union profits while small businesses and their customers pay the price."

Restaurant Law Center Executive Director Robin Repass

"The sales tax and tips a restaurant operator collects pass through their businesses directly to the state and their employees, but the cost to process those payments is coming out of their pocket, cutting into their small margins. Illinois lawmakers intended to provide restaurant operators some relief by eliminating swipe fees on sales tax and tips, and a federal court upheld the law. When the OCC and NCUA stepped in without following the proper procedure they deprived Illinois restaurant owners of the procedural right to protect their interests."

Retail Litigation Center President Monica Welt
"At a time when families are watching every dollar they spend, states should be able to protect merchants and consumers from an anticompetitive payment system and its inflated swipe fees. Instead, banks and credit card companies are padding their profits with unnecessary swipe fees that squeeze merchants and drive-up prices for consumers. Retailers are even charged fees on taxes and tips simply collected for others. The OCC and NCUA overstepped their authority and bypassed the normal processes to block Illinois' reasonable law to curb these fees, instead favoring banks, credit unions and credit card companies over the American consumer."

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About NGA

NGA is the national trade association representing the retail and wholesale community grocers that comprise the independent sector of the food distribution industry. An independent retailer is a privately owned or controlled food retail company operating a variety of formats. The independent grocery sector is accountable for about 1.2 percent of the nation's overall economy and is responsible for generating more than $250 billion in sales, 1.1 million jobs, $39 billion in wages and $36 billion in taxes. NGA members include retail and wholesale grocers located in every congressional district across the country, as well as state grocers' associations, manufacturers and service suppliers. For more information about NGA, visit www.nationalgrocers.org