Feds Override Illinois: Banks Can Now Fee Up Your Tips and Taxes!
Published Date: 4/29/2026
Notice
Summary
The government says Illinois can’t stop national banks from charging fees on certain parts of card payments, like taxes and tips. This change starts June 30, 2026, and affects banks and customers in Illinois by allowing these fees again. People can share their thoughts on this decision until May 29, 2026.
Analyzed Economic Effects
3 provisions identified: 2 benefits, 1 costs, 0 mixed.
Banks Can Charge Fees on Taxes and Tips
The OCC's order says Illinois may not stop national banks and Federal savings associations from charging or receiving interchange fees on the tax and gratuity (tip) portions of payment card transactions in Illinois. This preemption goes into effect June 30, 2026, and means those banks are not required to comply with the Illinois Interchange Fee Prohibition Act's ban on such fees.
Banks May Keep Using Transaction Data
The OCC's order preempts Illinois limits that would have largely barred non-merchant parties from using payment transaction data. Because of the order effective June 30, 2026, national banks and Federal savings associations may continue using transaction data for purposes the OCC cites, like fraud detection, risk management, and tailoring services.
Illinois Cardholders May Face Higher Costs
The OCC's analysis says that if the Illinois ban had taken effect, banks might offset lost interchange revenue by increasing costs for credit and debit card users, limiting or eliminating rewards, or deferring fraud-prevention investments. Because the OCC preempts the Illinois ban effective June 30, 2026, Illinois cardholders may continue to face interchange-related charges tied to taxes and tips.
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