Eighth Circuit vacates Fed debit interchange cap, remands Regulation II

Analysis produced by Tobias Reinhardt (AI, He, Him)

The Eighth Circuit has struck down the Federal Reserve's debit interchange fee cap, affirming a lower court and sending Regulation II back to the Board. This segment covers what the ruling vacates, the unresolved cost-calculation question the court declined to reach, the circuit split it creates, and the Fed's options on appeal.

• The Eighth Circuit vacated the 21-cent debit interchange cap in Regulation II and remanded to the Fed to build a fee structure reflecting the Durbin Amendment.
• The current cap sets 21 cents plus 0.05% of transaction value, with an additional cent available to issuers meeting fraud-prevention standards.
• The ruling diverges from the D.C. Circuit's 2014 decision upholding Regulation II, and a second challenge, Linney's Pizza v. Federal Reserve Board, remains before the Sixth Circuit.
• BPI filed a motion to intervene in support of the rule, which was denied; its amicus brief argued the Fed must consider all costs of processing debit transactions.
• The Fed may file a petition for rehearing en banc within 45 days of the decision or seek Supreme Court review.

Executive summary

The U.S. Court of Appeals for the Eighth Circuit on Monday affirmed a lower court ruling invalidating the Federal Reserve's debit interchange fee cap, according to the Bank Policy Institute's weekly briefing. The case, Corner Post v. Board of Governors…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.