WASHINGTON — Credit union trade groups and other financial services groups have issued statements expressing disappointment and frustration with a federal appeals court ruling overturning the Federal Reserve’s debit card interchange fee cap, saying the ruling will hurt consumers.
As the CU Daily reports here, the 8th U.S. Circuit Court of Appeals affirmed a lower court decision vacating the Fed’s existing 21-cent base cap in Corner Post v. Board of Governors of the Federal Reserve System. The court sent the matter back to the agency to develop a fee structure consistent with its interpretation of federal law. It did not set a replacement rate, and the ruling takes effect when the court issues its mandate.
“Merchant groups may celebrate this ruling, but credit union members have good reason to be concerned about who ultimately pays the price,” Jason Stverak, chief advocacy officer with the Defense Credit Union Council, said in a statement. “Reducing the revenue that supports secure payments does not eliminate the cost of providing them.”
Putting Pressure on Credit Unions
DCUC said lower interchange revenue could put pressure on credit unions’ ability to offer affordable checking accounts, maintain payment systems and invest in fraud prevention. Unlike for-profit banks, credit unions are member-owned financial cooperatives that return earnings to members through services and benefits, the organization said.
“The merchants’ focus on the biggest banks leaves credit unions and their members out of the story,” Stverak said, adding that the costs of authorizing transactions, operating payment networks and detecting fraud remain regardless of how the Fed calculates permissible fees.
Previous Warnings to Policymakers
DCUC pointed to a June 23, 2025, letter to the House Financial Services Committee warning that additional interchange restrictions could shift costs to consumers and weaken community financial institutions.
In a Dec. 8, 2025, joint letter with other financial services trade groups, the council urged the Federal Reserve to withdraw its proposal for further debit interchange reductions, arguing that merchant savings would not necessarily result in lower prices at checkout.
DCUC also joined an industry friend-of-the-court brief in a separate 6th Circuit case involving Linney’s Pizza, announced June 8, 2026, defending the existing Regulation II framework. The groups argued that excluding actual transaction expenses from fee calculations could force issuers to process transactions at a loss and discourage investment in secure payment services.
Effects on Smaller Credit Unions
Federal rules exempt issuers with less than $10 billion in assets, including affiliates, from the interchange fee cap. DCUC said larger credit unions face direct exposure to changes in the regulated rate, while smaller exempt institutions could still experience competitive pressure that reduces their interchange income.
“For a military spouse managing household expenses during a deployment, or a young servicemember building financial stability, affordable checking and dependable access to money are necessities,” Stverak said.
DCUC is calling on the Federal Reserve to pursue available legal options to defend what it described as a sustainable debit payments system and urged Congress to consider the potential effects of further restrictions on credit union members.
“A reduction in merchants’ expenses is no guarantee of lower prices for families,” Stverak said. “Military families should not be handed the bill for merchant savings.”
America’s Credit Unions Calls Decision ‘Deeply Disappointing’
America’s Credit Unions was also critical of the ruling.
“Today’s ruling is deeply disappointing and threatens to destabilize a reliable, secure payments ecosystem that millions of everyday consumers and small businesses depend on,” America’s Credit Unions Vice President, Policy Engagement and Credit Union Operations Ann Petros said in a statement. “Vacating the Federal Reserve’s established fee framework ignores the real operational and fraud prevention costs required to run a safe debit network. While big box retailers celebrate this decision as a windfall for their bottom lines, economic history shows these savings are never passed along to consumers at the register.
“Even with statutory exemptions on paper, community-based financial institutions inevitably absorb the marketplace fallout when interchange is artificially driven down. Forcing the Federal Reserve to recalculate these rates under an overly narrow standard could create an administratively unworkable framework that risks fraud security and threatens low-cost debit access for working families,” Petros continued. “”America’s Credit Unions will actively engage through the courts and with policymakers as this rule is reconsidered to protect the safety and integrity of the payments system and ensure consumers do not bear the cost of merchant profit padding.”
Trade Groups Issue Joint Statement
America’s Credit Unions also joined with other financial services trade organizations in issuing a joint statement.
“We are deeply disappointed that the Eighth Circuit affirmed the district court’s decision in the Corner Post case,” the statement reads. “The Durbin Amendment’s government price controls have harmed consumers from the start by making it harder for banks to offer affordable banking services and valuable benefits. Today’s decision threatens to compound that harm by preventing regulated interchange fees from reflecting the real costs banks incur to process transactions, prevent fraud and protect customer data.
“For more than a decade, corporate megastores have pocketed billions from the Durbin Amendment while ignoring promises to lower prices for consumers. Now, they want to pay even less for the very payment system they rely on every day, leaving banks, credit unions and consumers to shoulder the costs.
“It’s important to remember that this decision is not the last word on these issues. Another federal appellate court is considering similar questions in the Linney’s Pizza case, where the district court upheld the Federal Reserve’s rule. We will continue advocating for an approach that protects consumers and preserves the safe and efficient debit card system they depend on.”
