8th Circuit Affirms Vacatur of Fed's Debit Interchange Cap
The Eighth Circuit has affirmed a district court's vacatur of the Federal Reserve's 21-cent per-transaction debit interchange cap under Regulation II, reopening the pricing and coverage questions the Durbin Amendment created.
On October 26, the U.S. Court of Appeals for the Eighth Circuit affirmed a district court decision vacating the Federal Reserve's 21-cent per-transaction cap on debit card interchange fees under Regulation II. The appellate panel's stated reasoning concerns the Durbin Amendment, the statutory provision the Fed used to define which issuers fall within the cap; the available report is truncated and does not set out the panel's full analysis, so the precise scope of the holding — including anything remanded for further proceedings and the treatment of covered issuers generally — should be confirmed against the opinion itself.
Why sophisticated counsel should care: Regulation II has shaped the economics of debit interchange since the Durbin Amendment took effect, and the cap has driven pricing, routing, and fee-allocation negotiations among banks, networks, and merchants for years. An affirmed vacatur unsettles who is covered and how interchange is priced, with consequences for issuer revenue, merchant fee pass-through, and any pending disputes or class actions that reference capped interchange rates. The Federal Reserve's options — no substitute rule, a narrower rule, or appellate follow-on — remain open and are the next thing to watch, alongside related challenges in other circuits.