The mechanism: In August 2025, a federal judge in North Dakota vacated the Federal Reserve's Regulation II debit interchange cap, ruling the Fed overstepped the Durbin Amendment when it set the 21-cent-plus-basis-points ceiling in 2011. The decision is stayed pending appeal to the Eighth Circuit, and the Fed's own 2023 proposal to cut the cap further (to roughly 14.4 cents) is now frozen behind that litigation. Either direction the case breaks — cap gutted entirely, or Fed forced to re-justify and possibly lower it — the interchange plumbing under every debit swipe in America gets repriced. That plumbing runs through bank-issued cards, and one structural fact splits winners from losers before a single rule changes: banks under $10 billion in assets are statutorily exempt from the cap altogether. Debit issued by exempt banks keeps collecting uncapped, market-rate interchange no matter what the Eighth Circuit decides.
Who cashes in: XYZ (Block) issues Cash App Card debit through partner banks that structure around the small-issuer exemption, so Cash App's swipe economics are largely insulated from the fight — a favorable outcome is upside, an unfavorable one barely touches it. MA (Mastercard) and V (Visa) don't collect interchange themselves, but both benefit from any prolonged uncertainty that keeps large issuers pushing volume toward premium, higher-yield debit and prepaid products routed on their rails, and both have historically absorbed rule changes better than issuers since their revenue is transaction-fee-based, not interchange-based. AXP (American Express) sits outside Reg II entirely as a closed-loop network with no third-party debit issuance at scale, making it a structural bystander that gains relative ground if bank-issued debit gets squeezed.