Preemption—Federal Credit Union Non-Interest Charges and Fees

The League of Credit Unions & Affiliates supports the NCUA's interim final rule, arguing that it provides necessary federal preemption to protect credit unions from a patchwork of state interchange fee restrictions. They emphasize that the rule ensures parity with national banks and prevents the disruption of the national payments system.

A coalition of trade associations representing credit unions and banks supports the NCUA's interim final rule regarding the preemption of state laws on non-interest charges and fees. They argue that the rule protects federal credit unions from costly and disruptive state-level regulations, such as Illinois' interchange fee prohibition, while maintaining a uniform national payments system.

The Food Industry Association (FMI) opposes the NCUA's interim final rule, arguing that it endorses anticompetitive fee-fixing by credit card networks and was issued through an improper, truncated rulemaking process. They urge the NCUA to rescind the rule to protect merchants and consumers from excessive swipe fees and to allow for a proper Administrative Procedure Act process.

The National Lumber and Building Material Dealers Association (NLBMDA) opposes the NCUA's Interim Final Rule because it adopts an overly broad view of preemption that risks displacing state-level policies, such as Illinois' ban on interchange fees on taxes and gratuities. The association argues that the rule fails to account for the significant financial burden that rising interchange fees impose on small and mid-sized merchants in the lumber and building materials industry.

State Employees' Credit Union (SECU) supports the NCUA's action to clarify preemption authority regarding non-interest charges and fees but urges the Board to extend these protections to federally-insured, state-chartered credit unions (FISCUs). They argue that FISCUs face the same safety-and-soundness risks as federal credit unions regarding the Illinois Interchange Fee Prohibition Act (IFPA) and that failing to do so creates unfair competitive disparities.

Mastercard supports the NCUA's Interim Final Rule, which clarifies that federal credit unions have the authority to charge non-interest fees and interchange fees, thereby preempting state laws like the Illinois Interchange Fee Prohibition Act. The company argues that the rule provides necessary regulatory certainty, maintains a nationally uniform payment system, and prevents operational inefficiencies caused by state-specific mandates.

The Merchants Payments Coalition (MPC) opposes the NCUA's Interim Final Rule, arguing that it exceeds the agency's statutory authority, violates antitrust principles, and improperly preempts state laws like the Illinois Interchange Fee Prohibition Act. They contend that the rule is based on an inaccurate understanding of the payments ecosystem and fails to meet procedural requirements under the APA and RFA.

The International Center for Law & Economics (ICLE) supports the NCUA's interim final rule, which clarifies that federal credit unions may charge non-interest charges and fees and preempts the Illinois Interchange Fee Prohibition Act (IFPA). The organization argues that the IFPA would create significant economic costs, technological complexities, and negative impacts on consumer benefits and payment system efficiency.

Neil P. Osnato of Persistence Analytics Group LLC supports the NCUA's identification of operational risks and implementation challenges regarding state-level fee restrictions on federal credit unions. He argues that regulators must verify the technical feasibility and reliability of payment-card infrastructure before imposing transaction-level obligations to avoid disrupting the financial system.

The Utah Credit Union Association strongly supports the NCUA's interim final rule clarifying that federal credit unions have the authority to charge non-interest fees and that such activities are preempted from state regulation. They argue that these fees are essential for funding fraud prevention and infrastructure, while also noting concerns regarding potential competitive disadvantages for state-chartered credit unions.