Eighth Circuit strikes down Fed's debit card interchange fee cap

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

A federal appeals court has struck down the Federal Reserve's 15-year-old Regulation II, which capped debit card interchange fees. This affects how banks with over $10 billion in assets calculate swipe fees, and the Fed must now rewrite the rule. Compliance and payments teams should track the Fed's response.

• The Eighth U.S. Circuit Court of Appeals struck down the Fed's Regulation II debit card interchange fee structure, adopted in 2011.
• The ruling upholds a lower court decision from August 2025 in which Judge Daniel Traynor found the Durbin Amendment bars the Fed from considering costs beyond incremental authorization, clearance or settlement.
• Under the current rule, institutions with more than $10 billion in assets can collect 21 cents per debit transaction plus 0.05% of the transaction amount and an additional cent for fraud prevention.
• The court ordered the Fed to rewrite the rule because it improperly allowed banks to include costs such as fraud prevention in swipe fee calculations.
• A separate federal appellate court is considering similar questions in the Linney's Pizza case, where the district court upheld the Fed's rule.

Executive summary

A federal appeals court on October 26, 2026 struck down the Federal Reserve's Regulation II, the 15-year-old rule governing debit card interchange fees. The Eighth U.S. Circuit Court of Appeals found that the Fed exceeded its authority in determining which…

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