Payments News Update – May 15, 2026
Legal and Regulatory Developments
SPOTLIGHT: Appeals Court Remands Illinois Card Fee Law
Payments Dive – May 8, 2026
A federal appeals court on Friday vacated a district court ruling regarding an Illinois law prohibiting interchange fees on the tax and tip portion of bills, arguing that a move by the Trump administration to preempt the law warrants further litigation. The case was remanded to the U.S. District Court for Northern Illinois.
The Illinois Attorney General’s office argued that an “interim final order” by the Office of the Comptroller of the Currency last month preempting the law was invalid due to procedural flaws and did not affect the merits of the case. Bank and credit union plaintiffs in the case, along with the OCC, argued that the court should strike down the law because of the regulator’s action.
“The district court should address these matters, and any related issues, before this court attempts to do so,” the 7th Circuit U.S. Court of Appeals said in the order Friday. The court canceled oral arguments that had been scheduled for May 13. . . .
Lawmakers Move to Exempt More Banks From Debit Card Fee Caps
PYMNTS – May 13, 2026
Two bills passed Tuesday (May 12) by the House of Representatives are only the latest efforts by lawmakers to cut red tape for smaller banks.
A bill in the U.S. Senate would exempt more small financial institutions from the Durbin Amendment to the Dodd-Frank Act rule that caps debit card fees.
The Community Bank Relief Act (S.3849) would raise the current $10 billion asset threshold exempting small financial institutions from the rule and would tie that threshold to the annual cost-of-living adjustment measured by the Consumer Price Index (CPI), its sponsors said in a Feb. 13 press release announcing the introduction of the bill. . . .
Eighth Circuit Presses Federal Reserve on 21-Cent Debit Card Fee Cap
Courthouse News Service – May 13, 2026
A truck stop told an Eighth Circuit panel Wednesday the Federal Reserve’s set fee cap on debit card swipes is far higher than Congress ever intended.
Corner Post, a North Dakota-based convenience store, argues the 21-cent interchange fee cap imposed on debit card transactions departs from the plain text of the Durbin Amendment and inflates fees for the benefit of big banks.
Enacted in 2010, the Durbin Amendment requires the Federal Reserve Board to ensure interchange fees are “reasonable and proportional” to the cost actually incurred by a bank for a given transaction, as part of a broader effort to curb skyrocketing swipe fees. . . .
Industry Developments
SPOTLIGHT: The Invisible Payment
Digital Transactions Magazine – May 2026
It has been 16 years since Uber debuted and ushered in the first embedded-payment experience for many consumers. Today, embedded payments abound and are not constrained to a mobile app.
The growth in the availability and use of embedded payments owes much to payment technologies such as tokenization and encryption, not to mention the development of card-on-file applications for consumers and merchants.
In practical terms, however, the act of making a payment for a ride share, an ecommerce purchase, a peer-to-peer transfer, or a just-walk-out purchase at an airport shop is just as critical to the role embedded payments play today. . . .
Shoppers Are Ready for AI to Steer the Cart, Not Swipe the Card
PYMNTS – May 12, 2026
It’s certainly nice to imagine a digital assistant that can take over the weekly grocery trip, but not if that assistant is going to steal the shopper’s identity and drain their bank account.
New research from the latest edition of PYMNTS Intelligence’s exclusive Agentic AI Report shows that Americans are increasingly comfortable letting artificial intelligence (AI) take over their carts. More than half of U.S. consumers already use AI in the buying process, making it the most popular use case for the technology today.
It’s not just about asking AI what to buy anymore. Many consumers are open to letting autonomous agents handle the entire transaction. . . .
Fed Payments Diary: Cash Use Dips, But Remains Resilient
Digital Transactions News – May 12, 2026
Credit and debit card use is up, but cash remains in 76% of consumer wallets, finds the 2026 Diary of Consumer Payment Choice, released by Federal Reserve Financial Services.
Now in its 10th year, the report found that, on average, a consumer made six monthly cash payments in 2025, down 57.1% since the 2016 tally of 14 times. Indeed, 81% of consumers used cash in the prior 30 days to make a payment, down from a recent peak of 87% in 2023.
What’s taken up the slack? Credit and debit card payments. In 2016, the first year for the payments diary, a consumer made on average 12 debit card transactions and eight credit card transactions a month. In 2025, they made 15 debit and 16 credit card payments. . . .