Eighth Circuit Affirms Vacatur of Fed Debit Interchange Fee Cap

The Eighth Circuit affirmed the vacatur of the Federal Reserve's Regulation II debit interchange fee cap, holding that the Board's cost-based methodology for setting regulated debit transaction fees was defective, and remanded for the agency to adopt a workable replacement standard. The court left the Reserve meaningful discretion to frame that standard within the boundaries of the authorizing statute, so the ruling is a framework setback rather than an operative substitute cap or fee schedule. For banks, payment networks, and large merchants, the open questions are how much pricing latitude returns, what cost methodology commenters will urge on remand, and how issuers and processors re-price debit portfolios in the interim. Sophisticated counsel should track the remanded docket, where the new methodology and the compliance timeline will be litigated and negotiated, and monitor whether the prevailing parties seek further appellate review, including a possible certiorari petition, which would affect when any final rule arrives. Uncertainty remains concentrated in the breadth of agency discretion on remand and the absence of an operative rule in the interim.