The US District Court for the District of North Dakota granted summary judgment in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, invalidating the Federal Reserve's Regulation II debit interchange fee cap. The court found the Fed exceeded its statutory authority under the Durbin Amendment. In December 2025, the ABA and eight banking and payments associations formally asked the Fed to withdraw its 2023 proposal to further reduce the cap from approximately 24.5 cents to 17.7 cents per transaction.
Legal Background
The Durbin Amendment (2010) directed the Fed to cap debit interchange fees at levels "reasonable and proportional" to transaction costs. The Fed's implementing regulation (Reg II) set the cap at approximately 24.5 cents. In 2023, the Fed proposed lowering it to approximately 17.7 cents based on updated cost data. The Corner Post ruling challenged the original authority, not just the reduction.
Industry Response
Banking associations argue the proposed reduction would cost issuers over $3 billion annually in debit interchange revenue, threatening fraud prevention investments and free checking account availability. Merchant groups counter that current caps still far exceed actual transaction processing costs.
What This Means
This throws the entire US debit interchange regulatory framework into legal uncertainty. If upheld on appeal, it could eliminate federal debit interchange caps altogether - reversing a decade of Durbin Amendment regulation and potentially increasing debit interchange fees for millions of merchants. The case is expected to reach the federal appeals court in 2026.
Sources: Consumer Finance Monitor, Finextra