Retailers Applaud Eighth Circuit Decision Striking Down Fed’s Debit Swipe Fee Cap

 The Retail Litigation Center (RLC) today welcomed a major victory for merchants in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, after the U.S. Court of Appeals for the Eighth Circuit affirmed a decision striking down the Federal Reserve’s current cap on debit-card interchange fees for large banks, known as Regulation II. 

RLC led a coalition of merchant and business associations in an amicus brief supporting Corner Post. The coalition argued that Regulation II exceeded the Federal Reserve’s authority by allowing banks to recover costs that Congress expressly excluded from the interchange fee calculation. The Eighth Circuit agreed with that central position, holding that the Durbin Amendment permits the Fed to account for the additional cost of processing a transaction, but not fixed costs that banks incur regardless of whether a particular transaction takes place. The court directed the Fed to develop a fee structure consistent with the law enacted by Congress more than 15 years ago.   

“This is a significant victory for every retailer and consumer forced to pay inflated debit-card fees, which drive up the price of everyday transactions,” said Monica Welt, RLC President. “The court confirmed that the Federal Reserve cannot allow banks to recover costs that Congress expressly excluded from the interchange fee calculation. Congress imposed meaningful limits to protect a fair and competitive payments system, and today’s decision enforces those limits.” 

The ruling arrives as the Federal Reserve is separately considering a proposal to reduce the existing Regulation II cap, which has remained largely unchanged since 2011 despite substantial changes in the cost and scale of debit-card processing.  

The Eighth Circuit’s ruling is not yet effective and may be subject to further review. A separate challenge to Regulation II, Linney’s Pizza, LLC v. Board of Governors of the Federal Reserve System, remains pending before the U.S. Court of Appeals for the Sixth Circuit. 

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Media Contact: press@rila.org

Directed by the chief legal officers of the country's leading retail companies, the Retail Litigation Center (RLC) is the only organization dedicated to advocating for the industry's top priorities in the federal and state judiciary. The RLC also works with leading law firms and retail corporate counsel to develop forward-thinking strategies to combat meritless mass action litigation. Founded by the Retail Industry Leaders Association (RILA) in 2010 as an independent organization, the RLC is a 501(c)(6) membership association open to all retailers and select law firms.