An appeals court struck down the Fed's 21 cent debit fee cap. What it means for US restaurants

On Monday, October 26, 2026, a three-judge panel of the US Court of Appeals for the Eighth Circuit ruled that the Federal Reserve set its debit card swipe fee cap the wrong way. The court affirmed a 2025 decision that vacates the current cap, 21 cents plus 0.05% of the sale plus a 1 cent fraud-prevention adjustment, and sent the rule back to the Fed to write a new one.

What the court decided

The case, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, was brought in 2021 by a truck stop and convenience store in Watford City, North Dakota. The Durbin Amendment says regulated debit fees must be "reasonable and proportional" to the issuer's cost, and tells the Fed to consider the "incremental cost" of a particular transaction and to leave out other costs.

The panel read "incremental cost" as marginal cost: what one more debit transaction adds to a bank's costs. It found the Fed had also counted fixed costs of authorization, clearance and settlement, network processing fees, fraud-monitoring costs and fraud losses. "Not just pick a number and hope it is close enough for government work," Judge David Stras wrote. The court added that fees do not have to match marginal cost exactly, and that the Fed may use a reasonable proxy.

What changes now: nothing on your statement, yet

• The cap is still in force today. The district court stayed its order while the appeal ran, and the Eighth Circuit's opinion says its decision takes effect only when its mandate issues, seven days after the deadline for a rehearing petition, which is 45 days in cases involving a federal agency, or after a rehearing request is denied.
• The Fed has to write a new rule. A Fed spokesperson told Payments Dive the agency had no comment. Its own 2023 proposal, which it never finalized, would have cut the base fee to 14.4 cents, the ad valorem part to 0.04% and set the fraud adjustment at 1.3 cents.
• It is not the last word. A similar challenge, Linney's Pizza, is before the Sixth Circuit, where a Kentucky district court upheld the Fed's rule. America's Credit Unions says oral arguments were heard last week and that the two cases could set up a circuit split and a Supreme Court appeal. Bank groups called the ruling "deeply disappointing"; the Merchants Payments Coalition welcomed it.
• It only covers big issuers. The cap applies to banks and credit unions with $10 billion or more in assets. Cards from smaller issuers are not capped.

Will a lower cap reach a restaurant?

Debit interchange is paid by your processor to the cardholder's bank. Whether a cut ever shows up on your bill depends on how you are priced:

• Interchange-plus pricing passes interchange through at cost, so a lower regulated debit rate would flow to you automatically.
• Flat-rate and tiered pricing charge you the same posted rate whatever the underlying interchange is. If the cap falls and your rate doesn't, the difference stays with the processor.

The Merchants Payments Coalition, citing the Nilson Report, says debit swipe fees cost US merchants and their customers $40.5 billion in 2025. For a restaurant, the practical step is the same one we suggest every month: know what you pay for debit today, separately from credit. Our ten-minute effective rate guide shows how, and our cash discount program page explains how a discount from one posted price works under US card network and state rules. If you run a restaurant in Tampa Bay, Miami, Fort Lauderdale or Naples, our area pages cover what operators there typically pay.

This ruling is about US debit only. It is separate from the Visa and Mastercard credit card settlement, whose final approval hearing is November 16. Canadian debit runs mostly on Interac, which sets its own fees; see Canada's fall card fee changes.