Eighth Circuit upholds ruling that struck down the Fed's 21-cent debit interchange cap

The Eighth Circuit has affirmed a lower court ruling that vacated the Federal Reserve's 2011 debit interchange cap, in Corner Post v. Board of Governors of the Federal Reserve System, ruling on 26 October that the Fed exceeded its authority under the Durbin Amendment in calculating allowable costs.

Regulation II lets issuers with more than $10 billion in assets collect 21 cents plus 0.05% of the transaction and one cent for fraud prevention. The district court held that only incremental authorization, clearance and settlement costs may count, not fixed costs. The Fed must write a new standard and could appeal to the Supreme Court.

A 2023 Fed proposal to lower the cap is not final, and another appeals court is weighing a similar challenge. Bank trade groups said they were disappointed.