Every time a customer pays with a debit card at your business, you pay a fee. You already know this. What you might not know is that the amount of that fee - capped at 21 cents per transaction by a Federal Reserve rule - is the subject of an active federal lawsuit that could lower what you pay.

A small pizza restaurant in Frankfort, Kentucky is the plaintiff. The Federal Reserve is the defendant. And on May 6, 2026, NFIB filed a brief backing the pizza shop.

The 21-cent rule and why it matters

In 2010, Congress passed the Durbin Amendment as part of the Dodd-Frank Act. The law told the Federal Reserve to cap debit card "interchange fees" - the amount banks charge merchants per transaction - at a "reasonable" level. The Fed set the cap at 21 cents per transaction, plus 0.05% of the transaction amount, plus a small fraud adjustment.

That sounds like a win for small businesses. Before the cap, debit interchange fees often ran 1-2% of the transaction. The cap reduced fees significantly for large-ticket purchases.

But here's the catch: the 21-cent floor is also effectively the ceiling, and it applies to every transaction regardless of size. Buy a $3 cup of coffee? The bank still gets 21 cents - that's 7% of the transaction. Merchants - especially small ones with low average ticket sizes - argue that the cap is not actually capped at a reasonable level. It's capped at an artificially high one.

The case: Linney's Pizza, LLC v. Board of Governors

Linney's Pizza filed suit in 2022 arguing that the Federal Reserve's regulation violated the Dodd-Frank Act. Their argument is technical but important: the Act says the Fed can only allow banks to recover certain specific costs in setting the fee cap. The Fed's current rule allows banks to recover costs that Congress did not authorize - which means the cap is higher than it's legally allowed to be.

The case is now at the U.S. Court of Appeals for the Sixth Circuit.

NFIB filed an amicus brief on May 6 - a "friend of the court" document - joining the Retail Litigation Center and other business groups in support of Linney's Pizza. Their argument: the district court that ruled against the pizza shop made a legal error. The appeals court should correct it.

"While accepting debit card payments is status quo for Main Street business owners, the exorbitant interchange fees charged by banks should not be," said Beth Milito, Vice President and Executive Director of NFIB's Small Business Legal Center. "Small businesses are looking to the court of appeals to correct this mistake and prevent big banks from draining Main Street business owners dry through unreasonable swipe fees."

What this is worth in actual dollars

The math on swipe fees is uncomfortable to look at directly.

At 21 cents per transaction, a business that processes 500 debit card transactions per day pays $105 per day in interchange fees alone - $38,325 per year. That assumes no percentage-based add-ons.

For context: that's one part-time employee in some markets. It's a year of small business insurance in most. It's not nothing.

If the court rules against the Federal Reserve and forces a reset of the cap, what happens next is uncertain. Congress would likely have to get involved in setting new parameters. But the legal outcome could force the Fed to recalculate what banks are actually permitted to recover - which, if the plaintiffs are right, would lower the cap.

NFIB has been active in a parallel case, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, in the Eighth Circuit - the same legal theory, different jurisdiction.

What does this mean for you right now

Nothing yet. Appellate court cases move slowly. Even a favorable ruling wouldn't immediately change what you pay at the terminal.

But there are a few things worth knowing:

This is a legitimate legal challenge with significant backing. NFIB doesn't file amicus briefs in cases they think are losing. The Retail Litigation Center - which represents major retailers - is also in. The legal argument has been taken seriously enough to survive to the appeals stage.

Your current fee situation is not locked in permanently. Payment processing is a cost most small businesses treat as fixed. It isn't. Fees vary by processor, card network, transaction type, and whether you're on interchange-plus pricing versus flat-rate. It is worth auditing.

Interchange-plus pricing is what you want if you're doing any real volume. It passes through the actual interchange fee and adds a fixed margin for your processor - which means you benefit directly if interchange rates ever fall. Flat-rate pricing (like Stripe's 2.9% + 30 cents) bundles everything and eliminates that benefit.

Debit routing choice matters. Dodd-Frank also required that debit cards be capable of processing through at least two unaffiliated networks, giving merchants the ability to route transactions to the cheaper one. Not every processor passes this benefit through automatically. Ask yours.

The bigger picture

Banks collected over $31 billion in debit interchange fees in the United States in 2023, according to industry data. That money comes directly out of merchant accounts - most of it from businesses too small to negotiate their own rates.

The legal fight over how that number is calculated is worth watching. A Kentucky pizza shop started it. It's a long way from over.

Sources: NFIB press release, "Debit Card Processing Fee Cap Challenged in Small Business Lawsuit," May 6, 2026 (nfib.com); NFIB amicus brief, Linney's Pizza, LLC v. Board of Governors of the Federal Reserve System, U.S. Court of Appeals for the Sixth Circuit, filed May 6, 2026 (nfib.com); Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1075 (Durbin Amendment), 2010.