If you take debit cards, the most your customer's bank can charge you on most of those sales is set by federal law. That limit is in question after a court ruling on October 26, 2026. Here is what happened, what it means for your costs, and what to do now.
What the court decided
The Eighth Circuit Court of Appeals unanimously agreed with a lower court that the Federal Reserve used the wrong method to set the debit interchange cap. The case is Corner Post v. Board of Governors of the Federal Reserve System. The court said the Fed's cost formula went beyond what the Durbin Amendment allows, and sent the rule back to the Fed to write a new one. It did not set a new rate.
Is the 21-cent cap still in place?
Yes, for now. The cap is still 21 cents plus 0.05% of the sale, plus up to 1 cent for fraud prevention. On a $40 debit sale, that is at most 24 cents. The lower court paused its own ruling while the appeal ran, and the appeals court decision only takes effect when it formally issues its mandate. Based on the court deadlines, that is unlikely before mid-December 2026.
What could happen next
- The government can ask the full appeals court to rehear the case, which would delay the mandate.
- A similar case is pending in another appeals court. If the two courts disagree, the Supreme Court may take it up.
- The Fed has to write a new cap. Its 2023 proposal to lower the cap to 14.4 cents plus 0.04% was never adopted, and it uses the same method the court rejected.
- If the cap is set aside before a new one exists, it is not yet clear what limit, if any, would apply in the gap.
What it means for your business
Debit cards are usually your cheapest cards to accept because of this cap. If the cap goes away, or a new one is set higher, your debit costs could rise. If the Fed eventually sets a lower cap, they could fall. Either way, nothing changes on your statement today.
What to do now
- Know your debit share. Look at how many of your sales are debit on your statement, so you know how much a change would matter.
- Watch your next few statements for new or higher debit fees.
- Remember that debit can't be surcharged. If you want card customers to cover the cost, dual pricing or a cash discount works on debit and credit alike.
- Ask for a free rate review if you want a clear picture of what you pay on debit today.
- If you are an agent or ISO, this is the conversation to have with your merchants now, before their statements change. See our agent and ISO partner program.
We'll update this post when the court issues its mandate or the Fed acts.
About the author
Josh Elsass
President, PayVault Solutions
Josh Elsass is President of PayVault Solutions, where he leads merchant sales and the agent and ISO partner channel. A payments executive with more than two decades of sales leadership in payment processing and business financing, he has worked with thousands of small businesses and enterprises nationwide and has been part of three successful company exits, building the sales channel behind each one. Before PayVault, he served as Chief Sales Officer and then President, Operating Companies at Simpay, where he strengthened every sales channel and oversaw day-to-day operations. Josh has built his career on one conviction: the best companies value clients, partners and employees equally. At PayVault, that means pricing explained line by line for every merchant and terms in writing for every sales partner.
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