What happened
- Specific facts/numbers: The Eighth Circuit on October 26, 2026 upheld a lower-court ruling vacating the Federal Reserve’s Regulation II debit-card interchange cap, including the long-standing base cap of 21 cents per transaction, because the rule included costs the court said Congress did not authorize.
- Institutions involved: The Federal Reserve Board of Governors was the appellant in Corner Post v. Board of Governors of the Federal Reserve System; merchants and retail trade groups including the Retail Litigation Center and FMI publicly welcomed the ruling, while industry groups for financial institutions warned it could cut interchange income.
- Regulatory/technical context: The case turns on the Durbin Amendment’s requirement that debit interchange fees be “reasonable and proportional” to transaction-processing costs. The appeals court said the Fed’s formula under Regulation II improperly let issuers recover certain fixed costs not tied to individual transactions, so the rule must be rewritten.
- What to watch next: Watch for whether the Fed seeks further review and, more importantly, how it rewrites Regulation II’s fee formula. No specific implementation timeline or other next milestone was identified in the materials reviewed.
Why it matters
A rewritten cap could lower debit acceptance costs for merchants while reducing fee revenue for large card issuers, affecting pricing and economics across U.S. card payments.
HKMA Relevance
Direct: This is a concrete U.S. central-bank payments rulemaking setback on debit interchange, a policy area Hong Kong banks and payment firms monitor, but it does not itself require HKMA action.