FMI – The Food Industry Association condemned action taken on April 24 by the Office of the Comptroller of the Currency, banking regulators under the U.S. Treasury Department, to issue two interim final rules.
The rules override the Illinois swipe fee reform law and prohibit other states from enacting swipe fee reform laws.
Leslie G. Sarasin, FMI president and CEO, framed the regulatory move as a betrayal of grocers, retailers and consumers at a moment of record financial industry profits.
“At a time when the largest banks and credit card networks are pulling in record profits on the backs of grocers, main street businesses and millions of American consumers through credit card swipe fees, it is incredibly shortsighted that the OCC banking regulators chose to pursue an opaque end-run around state lawmakers and the Courts at the behest of the credit card networks and the nation’s largest banks,” Sarasin said.
How the Illinois law works
Grocers and other merchants act as state and local governments’ agents in the collection and submission of state and local sales and excise taxes.
The Illinois Interchange Fee Prohibition Act, set to take effect this summer, prohibits the imposition of credit card swipe fees on the state and local sales and excise tax and gratuities portion of any sale in the state. Other states are considering similar legislation.
Tax on a tax
Sarasin argued that grocers and consumers are effectively being taxed twice when swipe fees are applied to government-imposed taxes that flow through retail transactions.
“Grocers and consumers are being taxed twice for this official government duty by having to pay credit card swipe fees to the card networks and nation’s largest banks just because we are a pass-through agent for state and local government taxes,” Sarasin said.
“In 2024 alone, these taxes on taxes resulted in nearly $11 billion in swipe fees to the card networks and largest banks on sales tax collection. OCC’s action is particularly alarming considering President Trump has prioritized bringing down costs for businesses and the customers they rely on by endorsing the Credit Card Competition Act (CCCA) to reform the credit card market.”
Sarasin urged the OCC to reverse course and refocus its attention on what FMI characterized as harmful practices by financial institutions.
“We urge the OCC to rescind this egregious tax on a tax rulemaking that flies in the face of President Trump’s agenda on affordability and focus its efforts instead on the predatory practices of these financial institutions,” Sarasin said.
About FMI
As the food industry association, FMI – The Food Industry Association works with and on behalf of the entire industry to advance a safer, healthier and more efficient consumer food supply chain.
FMI brings together a wide range of members across the value chain — from retailers that sell to consumers, to producers that supply food and other products, as well as the wide variety of companies providing critical services — to amplify the collective work of the industry.
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