WASHINGTON—The Defense Credit Union Council is urging the National Credit Union Administration to finalize an interim rule that affirms federal credit unions’ authority to assess interchange and other non-interest fees associated with payment card operations, arguing the measure is necessary to preserve a uniform national payments system and protect federal preemption over conflicting state laws.
In a comment letter submitted to the NCUA, DCUC said it strongly supports the agency’s interim final rule clarifying that the incidental powers granted to federal credit unions under the Federal Credit Union Act include the authority to assess, collect and receive non-interest charges and fees, including interchange fees generated through debit and credit card transactions.
The trade group said the clarification is especially important in light of the Illinois Interchange Fee Prohibition Act (IIFPA), which it argued creates uncertainty by imposing state-level restrictions on federally authorized payment card activities.
‘Provides Legal Certainty’
“The rule provides legal certainty for FCUs while preserving the uniform national payments framework necessary for safe, efficient, and reliable financial services,” DCUC Chief Advocacy Officer Jason Stverak wrote in the letter.
According to DCUC, the interim rule does not expand the powers of federal credit unions but instead clarifies authority they have long possessed under federal law. The organization argued that allowing individual states to regulate interchange fees and payment card operations would undermine the nationwide payments system and create operational challenges for financial institutions, merchants and consumers.
The association said those concerns are particularly significant for defense credit unions, whose members frequently relocate among states, deploy overseas or maintain financial relationships across multiple jurisdictions.
“As an association representing defense and military-serving credit unions, DCUC is particularly concerned about the consequences of a patchwork payments regime for military families and communities,” the organization wrote.
Clarification Also Gets Support
DCUC also backed the NCUA’s decision to issue the clarification through an interim final rule that took immediate effect, saying the uncertainty created by the Illinois law justified prompt agency action.
The organization urged the NCUA Board to adopt the interim rule as a final rule without modification.
In a separate announcement accompanying the filing, DCUC praised the NCUA Board for responding to industry concerns and reaffirming that federal law preempts state laws that interfere with federally authorized payment card activities.
“Varying state restrictions on interchange fees and payment processing could undermine the uniform national payments framework relied upon by consumers, businesses, and military communities,” Stverak said in the statement. “The interim final rule provides important legal certainty for federal credit unions and appropriately preserves the integrity, efficiency, and reliability of the nation’s payments system.”
Applause for Proposal
DCUC President and CEO Anthony Hernandez also applauded the proposal.
“DCUC appreciates the NCUA’s continued efforts to modernize its regulatory framework and ensure credit unions can effectively serve their members in an increasingly complex financial environment,” Hernandez said. “We strongly support reforms that reduce unnecessary burden, provide greater regulatory clarity, and preserve the federally granted authorities credit unions rely upon to deliver affordable financial services.”
