Appeals court strikes down Fed debit card fee cap

The Eighth U.S. Circuit Court of Appeals on Monday struck down the Federal Reserve's Regulation II debit card interchange fee cap, upholding a 2025 district court ruling that the Fed exceeded its authority under the Durbin Amendment by counting costs beyond incremental transaction costs.

Why it matters: The 2011 cap, 21 cents per transaction plus 0.05 percent of the amount and a one cent fraud prevention add-on for issuers with more than $10 billion in assets, has governed debit economics for 15 years, and the Fed must now rewrite it on a narrower cost basis while a conflicting case works through another circuit.

Data as of ABA Banking Journal report of October 26, 2026, read in full in this run, corroborated by PYMNTS reporting of the same ruling. The Eighth Circuit opinion itself was not obtained in this run. Developing item.

The Eighth U.S. Circuit Court of Appeals on Monday struck down the Federal Reserve’s Regulation II, the 2011 rule capping debit card interchange fees at 21 cents per transaction plus 0.05 percent of the transaction amount and an additional cent for fraud prevention, for issuers with more than $10 billion in assets. The panel upheld an August 2025 district court decision in the Corner Post case, holding that the Durbin Amendment permits the Fed to count only incremental authorization, clearance and settlement costs, and that the Fed must now rewrite the rule on that basis. Banking trade groups, including the American Bankers Association, called the ruling disappointing and said it prevents fees from reflecting the real costs of processing and fraud prevention, while noting that another federal appeals court is weighing a similar challenge in which a district court upheld the Fed’s rule.

Appeals court strikes down Fed debit card fee cap

Sources