FOR IMMEDIATE RELEASE
Contact: J. Craig Shearman
(202) 257-3678 craig@shearmancommunications.com
WASHINGTON, Oct. 26, 2026 — The Merchants Payments Coalition today welcomed a federal appeals court decision upholding a lower court’s ruling that the Federal Reserve’s 2011 regulated rate for debit card “swipe” fees was set higher than intended by Congress.
“Today’s decision confirms what merchants have said for more than a decade: The Fed let the nation’s biggest banks charge far more than the law allows,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “Two courts have now agreed that the current rate lets banks collect billions of dollars a year more from stores and their customers than the law ever meant for them to have — far more than it takes to cover their costs and earn a healthy profit. Rather than keep defending an illegal rule, the Fed should promptly replace it with one that complies with the law and takes some of the upward pressure off the prices shoppers pay every day.”
A three-judge panel of the 8th U.S. Circuit Court of Appeals today upheld a ruling issued last year by U.S. District Judge Daniel Traynor in favor of the Corner Post, a North Dakota truck stop and convenience store that filed suit in 2021 saying the Fed set the regulated rate too high. Traynor vacated the rate set by the Fed and told the agency to recalculate the number but placed the move on hold pending appeal.
Under regulations established in 2011, banks that have at least $10 billion in assets and follow rates set centrally by Visa and Mastercard are allowed to charge up to 21 cents per debit card transaction plus 1 cent for fraud prevention and 0.05% of the transaction amount for fraud loss recovery. Banks that are willing to set their own prices can charge as much as they want but none do that. Today’s ruling upheld Traynor’s order to vacate the rate and ordered the Fed “to come up with a fee structure that reflects the statute Congress wrote.”
The Corner Post case argued that the 2011 rate was set too high because a 2010 law passed by Congress required that the rate be “reasonable” and also “proportional” to banks’ costs. Under that law, the Fed was allowed to consider only banks’ incremental costs but the Fed instead took into consideration fixed costs, fraud losses, transaction monitoring and network processing fees.
“Ignoring what it was supposed to consider and considering that it was supposed to ignore would place the agency on the wrong side,” Circuit Judge David Stras wrote in today’s ruling.
A Fed proposal released in 2023 that has yet to be finalized would lower the base amount to 14.4 cents and the amount for fraud loss to 0.04% but would increase the amount for fraud prevention to 1.3 cents. MPC said in 2024 that the proposal didn’t go far enough because it would lower the amount banks can charge by less than a third even though banks’ average cost of processing a transaction has fallen by nearly 50% – from 7.7 cents just before the rate was set, to 3.9 cents as of 2021.
Debit card swipe fees averaged about 45 cents per transaction before the regulated rate was set, and merchants have saved an estimated $9 billion a year. Studies show 70% of the savings has been shared with consumers, largely by holding down inflationary price increases.
Even with the savings, debit card swipe fees cost merchants and their customers $40.5 billion in 2025, according to the Nilson Report. Credit and debit card swipe fees together totaled a record $198.25 billion in 2025 and are up 80% since the pandemic. The fees are most merchants’ highest operating cost after labor, driving up consumer prices by more than $1,200 a year for the average family.
About MPC
The Merchants Payments Coalition represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants. Follow MPC on Twitter, Facebook or LinkedIn for the latest on swipe fees.
