Payment UpdateWeek of Nov 2
Debit fees may change. Your rate won't on its own. The Eighth Circuit's ruling, and how to tell if it reaches your statement
TL;DR
On October 26 a federal appeals court upheld a ruling that throws out the Fed's cap on debit card interchange, 21 cents plus 0.05% per swipe for the biggest banks. No new number was set, the ruling isn't in effect yet, and a second court could disagree. Here's what the decision does, why a lower cap only reaches some statements, and the one thing I'd check before celebrating a headline.
What happened
Heads up: on October 26, 2026 the Eighth Circuit Court of Appeals upheld a lower court's decision to vacate the Federal Reserve's cap on debit card interchange. The cap, set in 2011, is 21 cents plus 0.05% of the sale, with an extra penny for banks that meet fraud standards. It applies to banks and credit unions with more than $10 billion in assets.
The court said the Fed counted costs the law doesn't allow and sent the rule back to be rewritten. It did not set a new number. The Fed proposed 14.4 cents in 2023 and has not adopted it. The ruling doesn't take effect until the court issues its mandate, and the Fed can ask for a rehearing or go to the Supreme Court. A second appeals court heard a similar case on October 22 and could rule the other way, which would make a Supreme Court case more likely.
So today's cap still applies, and the earliest anything moves is weeks away, possibly much longer.
What it means for you
Say the cap does come down next year. Whether your bill moves depends on the pricing you're on, not on the court.
Interchange is the wholesale cost of a card payment, paid to the bank that issued the card. If you're on interchange plus pricing, that cost is passed through to you line by line, and a lower cap shows up on your statement the month it takes effect. If you're on a flat rate, your processor quoted you one blended number, and a lower wholesale cost doesn't have to change it at all. Same headline, two different bills.
Most small shops couldn't tell you which one they're on. That's the gap worth closing now, while nothing has changed.
If it were my counter
I'd find out which pricing I'm on before I celebrated a headline.
Pull one statement. If you see interchange categories listed line by line, with names like "Visa CPS Retail Debit", you're on pass-through pricing and any cut flows to you. If you see one rate, or two, applied to everything, you're on a flat rate, and I'd ask the processor in writing whether a lower debit cap changes it. I'd get that answer now, so that if the cap does fall, I already know whether to expect a smaller bill or to go negotiate one.
A court ruling is not a rate cut. It's a reason to read your statement.
Questions owners ask
Did debit fees go down on October 26?
No. The court vacated the rule but the decision isn't in effect until the mandate issues, and the Fed has to write a new cap. Nothing on a merchant statement changed because of the ruling.
Does the cap cover every debit card?
No. It only covers cards issued by banks and credit unions with more than $10 billion in assets. Cards from banks and credit unions under $10 billion are exempt, and the ruling doesn't change that.
How do I know if I'm on interchange plus or a flat rate?
Look at one month's statement. Interchange plus lists card categories and their individual costs, then a separate processor markup. A flat rate shows one or two blended percentages. If you can't tell, send us the statement and we'll read it with you.
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