Why Illinois should alarm every credit union in America.

For too long, many in the credit union movement viewed interchange as a federal issue. The debates centered around Washington, D.C., Congress, federal regulators, and national legislation such as the Durbin Amendment or the Credit Card Competition Act.

That world no longer exists.

Today, the most immediate threat to credit unions’ ability to serve their members is increasingly emerging in state capitols across America. The battles being fought in Colorado, Illinois, and other states should serve as a wake-up call for every credit union executive, volunteer, and advocate in the country.

If we fail to engage at the state level, we risk waking up one day to find that the rules governing our payment systems, member rewards programs, fraud prevention capabilities, and operational costs have been fundamentally altered—not by Congress, but by state legislatures.

The Defense Credit Union Council has spent the last several years warning that interchange attacks would not remain confined to Washington. Unfortunately, those warnings are proving correct.

In Colorado, DCUC worked aggressively alongside coalition partners to oppose Senate Bill 26-134, legislation that would have imposed state-level restrictions on payment card network fees and disrupted the national payments ecosystem. DCUC formally urged Governor Jared Polis to veto the legislation, warning that it would create operational complexity, increase compliance burdens, and ultimately threaten benefits enjoyed by consumers and credit union members throughout the state.

Governor Polis ultimately vetoed the legislation, recognizing concerns raised by financial institutions, payment networks, and consumer advocates. That veto was a significant victory, but it was also a reminder that these fights are becoming increasingly frequent and increasingly sophisticated.

Colorado was not an isolated event.

Illinois presents an even more sobering example.

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The Illinois Interchange Fee Prohibition Act (IFPA) has become the most significant state-level interchange battle in the nation. The law seeks to prohibit interchange fees on the tax and gratuity portions of electronic transactions, fundamentally altering how payment systems currently operate. Credit unions, banks, card networks, and trade associations have spent years challenging the measure because of its potential impact on payment processing, fraud mitigation, operational costs, and consumer benefits.

Recent legal developments have created an especially troubling reality. While federal regulators and courts have increasingly recognized that national banks, federal savings associations, and payment networks benefit from federal preemption protections, credit unions remain exposed to significant uncertainty. A recent federal court ruling permanently enjoined enforcement of portions of the Illinois law against national banks and several other entities but did not provide the same broad protection to credit unions and certain state-chartered institutions.

Think about that for a moment.

The result could be a regulatory framework where some financial institutions operate under one set of rules while credit unions face another. That is neither fair nor sustainable.

For defense credit unions and community-based institutions, this is not an abstract policy debate. Interchange revenue helps support fraud prevention systems, cybersecurity investments, payment infrastructure, card rewards programs, and member services. Reducing or fragmenting that revenue stream inevitably affects the products and services available to members.

What makes the Illinois situation particularly dangerous is that other states are watching.

Legislators around the country are studying the Illinois model. Retail groups and interchange opponents are actively promoting state-level legislation as an alternative to pursuing federal action. If Illinois ultimately succeeds, many fear that similar proposals could quickly spread across multiple states.

That is why DCUC has refused to sit on the sidelines.

Over the past several years, DCUC has submitted comment letters, organized coalition efforts, met with lawmakers, engaged regulators, coordinated with state leagues, communicated directly with governors, and educated policymakers on the unintended consequences of interchange mandates on members of the armed forces, veterans and their families. Most recently, DCUC called on the NCUA to provide clarity regarding the Illinois law and the agency’s authority to protect federal credit unions from conflicting state mandates.

But this cannot be alone.

The reality is that advocacy is not a spectator sport.

Every credit union benefits when organizations such as DCUC, state credit union leagues, and national trade associations engage lawmakers before bad legislation becomes law. Yet those efforts require participation, support, resources, and engagement from the institutions they represent.

Too often, credit unions view advocacy as something that happens somewhere else. They assume that someone else will attend the hearing, make the phone calls, submit the comment letter, or fund the coalition effort.

That assumption is increasingly dangerous.

The opponents of interchange are organized, well-funded, and persistent. They understand that state legislatures can become laboratories for policies that would struggle to pass at the federal level. They are playing a long game.

Credit unions must do the same.

The lesson from Colorado is that engagement works. The lesson from Illinois is that the fight is far from over. The lesson for every credit union leader should be clear: if you wait until legislation reaches your state, you are already behind.

The future of interchange policy will not be decided solely in Washington. It will be decided in Denver, Springfield, Sacramento, Albany, Austin, and dozens of other state capitals across America.

That means credit unions should support their leagues. They should support DCUC and national advocacy organizations. They must invest in political engagement. They should educate lawmakers. They should tell their stories.

Most importantly, they must understand that fighting for tomorrow’s credit union movement starts today.

Because when it comes to interchange, standing on the sidelines is no longer an option.

The fight has already begun.

Jason Stverak is Chief Advocacy Officer for the Defense Credit Union Council, a role he assumed in April 2024. He previously served as Deputy Chief Advocacy Officer for Federal Government Affairs at America’s Credit Unions and was interim chief advocacy officer in 2022 and 2023. Earlier in his career, he was deputy chief of staff to Senator Kevin Cramer and held senior legislative roles in Congress and advocacy organizations. A prominent voice on Capitol Hill, Stverak is a frequent media contributor and has been recognized as a top lobbyist by The Hill and the National Institute for Lobbying and Ethics.