
Eighth Circuit strikes Fed's 21-cent debit swipe-fee cap
Unanimous panel in Corner Post v. Federal Reserve says the Durbin Amendment limits regulators to per-transaction costs
The U.S. Court of Appeals for the Eighth Circuit ruled unanimously on Oct. 26 in Corner Post, Inc. v. Board of Governors of the Federal Reserve System. It affirmed a North Dakota federal judgment vacating Regulation II's debit interchange cap. The rule allows banks with more than $10 billion in assets to charge 21 cents per transaction, plus 0.05 percent of the purchase and a one-cent fraud-prevention adjustment. Judge David Stras, writing for the panel, read the Durbin Amendment's "incremental cost" language as marginal cost. On that reading the Fed improperly counted fixed costs that are not specific to a transaction. The court sent the rule back to the Fed and set no replacement cap. The decision is not yet effective: the mandate must issue, and rehearing or Supreme Court review is possible. A parallel challenge, Linney's Pizza v. Board of Governors, is pending in the Sixth Circuit after the Fed won in the Eastern District of Kentucky. A conflict between the circuits could send the question to the Supreme Court.
Why it mattersThe ruling could reset what merchants pay on debit swipes and what banks recover, and it applies the post-Loper Bright rule that courts, not agencies, resolve statutory ambiguity.


