Merchants win eighth‑Circuit ruling against Fed’s debit‑card fee rule
The court struck down the Federal Reserve’s new debit‑card fee caps, restoring merchant‑favored fee terms.
The U.S. Court of Appeals for the Eighth Circuit upheld a lower‑court ruling that declared the Federal Reserve’s attempt to cap debit‑card interchange fees under the Durbin Amendment unconstitutional or contrary to its statutory authority. The decision re‑establishes the status quo: banks may set interchange rates that merchants have long opposed, potentially increasing the cost for merchants but also reinforcing banks’ fee‑setting discretion. For counsel representing banks, the ruling signals a need to reassess fee‑cap proposals and adjust risk documents; for merchants, the outcome temporarily preserves their bargaining power but also raises uncertainty about future regulatory changes. The case underscores that federal regulatory actions on settlement fees still face institutional checks, and parties should monitor any legislative scrutiny of the Durbin Amendment or similar fee‑cap proposals. While the ruling applies to the Seventh and Eighth Circuits, it may influence nationwide interpretations of regulatory reach, prompting firms to adjust contract language and client advisories on potential fee shifts.