Did the Durbin Amendment debit card cap on interchange fees get struck down?

What the Eighth Circuit decided

On October 26, a unanimous three-judge Eighth Circuit panel upheld the North Dakota district court in *Corner Post, Inc. v. Board of Governors of the Federal Reserve System*. Judge David Stras wrote the opinion for a panel with Judges L.R. Smith and Benton. The result leaves in place the lower court's decision to throw out the Federal Reserve's current 21-cent debit interchange cap and sends the matter back to the agency for a new fee structure.

The appeal arose from a challenge by Corner Post, a North Dakota truck stop and convenience store. Courthouse News reported that the lower court had found the 21-cent formula unlawful in 2025. The ruling is about the charge that moves through the payment system from a merchant's bank to the cardholder's bank, not a fee a shopper necessarily sees on a receipt. A banking and finance lawyer can explain how the distinction applies to a bank or business relationship.

Why the 21-cent cap failed

The court said Congress told the Federal Reserve to consider the incremental cost of authorizing, clearing, or settling a particular debit transaction, while not considering other costs that are not specific to that transaction. In the panel's reading, incremental cost means marginal cost: the additional cost of one transaction. The court said fixed costs could not be put into the calculation.

Regulation II's current formula allows an eligible issuer to receive up to 21 cents plus five basis points of the transaction's value. An issuer that meets the rule's fraud-prevention standards may receive up to another cent per transaction. The opinion said that formula included fixed costs even though the statute told the agency to distinguish those from transaction-specific costs. That is why the court rejected the formula, not because it decided that every debit interchange fee must equal a bank's exact cost down to the penny.

What the Durbin Amendment still does

The Durbin Amendment is the part of the 2010 Dodd-Frank law that tells the Federal Reserve to set standards for debit interchange fees that are reasonable and proportional to an issuer's cost. The statute itself also says the agency must separate a particular transaction's incremental cost from other costs that are not specific to that transaction. The Eighth Circuit did not erase those statutory instructions.

The law also reaches more than the cap. It directs the Federal Reserve to prevent an issuer or network from limiting debit processing to fewer than two unaffiliated networks and from blocking a merchant from routing a debit transaction over an enabled network. The Federal Reserve's Regulation II overview describes those routing requirements separately from the fee standards. The fee-cap ruling does not say those routing provisions disappeared.

Not every issuer is covered by the fee limitation. The statute and current regulation exempt a qualifying issuer with less than $10 billion in assets, together with affiliates, and address government-administered payment programs and certain reloadable prepaid cards separately. The exact card and issuer matter. A business looking for North Dakota counsel can review lawyers in North Dakota, but that list cannot determine whether a particular issuer or card is exempt.

What changes now, and what does not

The court upheld the decision to throw out the cap, but the decision's legal effect depends on the mandate. Rule 40 ordinarily allows 45 days to seek rehearing in a civil case involving a United States agency, unless a court order changes the time. Rule 41 ordinarily makes the mandate issue seven days after that period expires, or later if a timely petition or stay motion is pending. That is why an October 26 opinion is not the same thing as a new rate taking effect that day.

The Federal Reserve must decide how to respond after the court sent the issue back. The panel said the agency may use a reasonable proxy, potentially average variable cost, if it bears a reasonable relationship to marginal costs. It did not choose a new number. It also did not decide whether a store will lower, raise, or hold prices. Those outcomes depend on later agency action and business choices, not on a rate announced by this opinion.

That separation is worth keeping straight in a broader run of 2026 court-power rulings. A court can throw out an agency formula while leaving the statute in force and giving the agency more work to do. An appeals lawyer can explain the posture of a particular case, including whether a mandate, rehearing order, or later agency rule changes it.

1. July 21, 2010

   Congress enacted the Durbin Amendment as part of Dodd-Frank.

2. July 20, 2011

   The Federal Reserve issued Regulation II's debit interchange standards.

3. October 26, 2026

   The Eighth Circuit upheld the decision to throw out the cap and sent the case back to the Federal Reserve.

A debit surcharge is a separate question

No, the Eighth Circuit's ruling does not authorize a 3% fee on a debit-card purchase. The case concerns the interchange fee within the payment system. It does not decide whether a merchant may impose a particular consumer-facing checkout charge, and it does not tell a person when to use a debit card instead of another payment method.

The Durbin Amendment limits network restrictions on some discounts and sets a federal ceiling for a merchant's minimum purchase amount for credit cards, but that is not a general answer to every debit-card surcharge question. A particular charge can turn on state law, the card-network agreement, how the charge was disclosed, and the facts of the transaction. If the charge is disputed or recurring, a consumer-law lawyer can assess the actual receipt and rule that applies.

What to verify next

For a reader facing a real charge, the useful question is not just whether the cap was struck down. It is what the charge was called, who imposed it, which card was used, and which state law or network rule applies. Keep the receipt and any notice from the merchant or card issuer. If the issue affects a business contract or a consumer dispute, request legal help with those specifics rather than relying on a headline about interchange fees.

1. Whether the charge appeared on a merchant receipt, a bank statement, or both
2. Whether the card and transaction were debit, credit, prepaid, or part of a government payment program
3. The state where the transaction happened and the wording of any posted fee notice
4. Whether a later mandate, rehearing order, or Federal Reserve rule has changed the court's October 26 posture