NDBA - North Dakota Bankers Association
10/08/2025 | Press release | Distributed by Public on 10/08/2025 11:52
Federal Reserve Appeals Reg II Interchange Fee Court Ruling
The Federal Reserve has appealed a federal court ruling striking down Regulation II's standard for setting debit interchange fees.
A group of North Dakota retailer trade associations and truck stop Corner Post sued the Fed in 2021 on the grounds that, in Reg II, the Fed allegedly exceeded its statutory authority to set interchange fees that are "reasonable and proportional to the cost incurred by the issuer with respect to the transaction." In an August ruling, U.S. District Court Judge Daniel Traynor sided with the plaintiffs, finding that the Dodd-Frank Act's Durbin Amendment "clearly prohibits" the consideration of any costs except for incremental authorization, clearance or settlement costs in setting fees.
Since then, a federal judge in Kentucky came to the opposite conclusion in a similar case, ruling that Reg II is not contrary to law, nor is it arbitrary and capricious. The Fed yesterday asked the U.S. Court of Appeals for the Eighth Circuit to review the North Dakota ruling. It did not cite a reason for the appeal.
A group of North Dakota retailer trade associations and truck stop Corner Post sued the Fed in 2021 on the grounds that, in Reg II, the Fed allegedly exceeded its statutory authority to set interchange fees that are "reasonable and proportional to the cost incurred by the issuer with respect to the transaction." In an August ruling, U.S. District Court Judge Daniel Traynor sided with the plaintiffs, finding that the Dodd-Frank Act's Durbin Amendment "clearly prohibits" the consideration of any costs except for incremental authorization, clearance or settlement costs in setting fees.
Since then, a federal judge in Kentucky came to the opposite conclusion in a similar case, ruling that Reg II is not contrary to law, nor is it arbitrary and capricious. The Fed yesterday asked the U.S. Court of Appeals for the Eighth Circuit to review the North Dakota ruling. It did not cite a reason for the appeal.
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