ST. LOUIS — The U.S. Court of Appeals for the Eighth Circuit heard oral arguments this week in a closely watched challenge to the Federal Reserve’s debit interchange fee cap, as judges pressed both sides on the meaning of “incremental cost” under the Durbin Amendment.
As the CU Daily has reported, the case, Corner Post v. Board of Governors, stems from a 2025 ruling by the U.S. District Court for the District of North Dakota that sided with retailers and could significantly reduce interchange fee caps. Corner Post is the name of a North Dakota convenience store that is the plaintiff in the case.
America’s Credit Unions filed an amicus brief in January arguing the lower court’s decision conflicts with the text, structure and purpose of the statute and could force the Federal Reserve to impose interchange caps below the actual costs incurred by debit card issuers.
Discussion Around ‘Incremental Cost’
During oral arguments, judges and attorneys repeatedly focused on how “incremental cost” should be interpreted under the Durbin Amendment, according to America’s Credit Unions.
The trade group noted the Federal Reserve Board has said there is “no single economic meaning” for the term and has not formally defined it. Judges questioned the Fed’s argument that both fixed and variable costs could qualify as incremental costs under the law, America’s Credit Unions noted, adding that a central dispute involved whether interchange fees should reimburse only transaction-specific costs.
The Plaintiff’s Argument
Corner Post argued Congress intended interchange fees to compensate issuers only for costs directly tied to individual debit transactions, while the Federal Reserve defended including broader operational expenses when setting the fee cap, according to America’s Credit Unions.
The trade group said judges also repeatedly questioned the scope of Congress’s intent, examining whether lawmakers meant to permit only narrow recovery of incremental costs or granted the Federal Reserve broader authority to shape interchange policy.
Task Force Discusses New Fraud Legislation
Separately, members of the America’s Credit Unions Fraud Task Force discussed a series of new legislative and regulatory developments last week as lawmakers and regulators advance efforts to combat financial fraud.
According to America’s Credit Unions, the discussion included several anti-fraud bills recently approved by the U.S. House Financial Services Committee, including:
- The AI PLAN Act, which would require federal agencies to develop strategies to address economic and national security threats posed by artificial intelligence used in financial crimes
- The GUARD Act, which would allow state and local law enforcement agencies to use existing federal grant funding to fight financial fraud targeting consumers
- The Bank Fraud Technology Advancement Act, which would require regulators and law enforcement agencies to study how technology can better be used to combat scams and fraud, particularly at smaller financial institutions.
Additional Areas for Discussion
Task force members discussed how the proposed legislation could aid efforts to protect credit union members and identified additional policy areas they believe lawmakers should address in future legislation, according to the trade group.
The task force also reviewed a recent joint proposal from the Financial Crimes Enforcement Network and the Office of Foreign Assets Control that would establish anti-money laundering and sanctions compliance requirements tied to the GENIUS Act, America’s Credit Unions said.
America’s Credit Unions said it issued a regulatory comment alert on the proposal and is accepting member feedback through May 26 as it prepares its own comment letter. Federal comments on the proposal are due June 9.
Members also discussed a new Nacha rule scheduled to take effect in June that will require receiving depository financial institutions to conduct automated clearing house credit monitoring, according to the trade group.
