The Green Sheet Online Edition
October 13, 2025 • 25:10:01
News Briefs
Fed to raise FedNow transaction cap to $10M <- click to read full story
The Federal Reserve will increase FedNow's transaction cap to $10 million in November 2025, marking the second hike this year as instant payments gain momentum. The Fed's earlier increase in June raised the ceiling from $500,000 to $1 million. The higher limit aligns FedNow with The Clearing House's RTP network, which raised its own cap to $10 million in February. According to the Fed, the new threshold will allow businesses to use instant payments for high-value transactions such as payroll, vendor payments and real estate transfers.
Financial institutions retain flexibility to impose lower internal limits and may use new risk-mitigation tools, like account activity thresholds, to manage exposure. Mark Gould, chief payments executive for Federal Reserve Financial Services, said the move "reflects growing demand for instant payments" and underscores FedNow's adaptability. Launched nationwide in July 2023, FedNow now counts more than 1,400 participating institutions. Officials said the expanded limit will accelerate modernization and support wider business use cases for real-time payments across the United States.
Google and PayPal partner to advance AI-driven commerce <- click to read full story
Google and PayPal entered a multiyear strategic partnership to accelerate AI-driven digital commerce and develop new standards for "agentic commerce" in which AI agents transact on users' behalf. Under the deal, PayPal's branded checkout, Hyperwallet and Payouts services will be embedded more deeply across Google's ecosystem, including Google Ads, Cloud and Play. In turn, PayPal will expand its use of Google Cloud to modernize its infrastructure. Google's AI capabilities are expected to enhance PayPal's products, improving personalization and fraud detection.
Both companies will promote Google's Agent Payments Protocol, an open standard for secure agent-initiated transactions. PayPal CEO Alex Chriss said the collaboration will bring PayPal's reach "to billions of Google users," while Google CEO Sundar Pichai described it as advancing commerce that is "simpler and more secure." Analysts view the partnership as part of a broader industry trend toward standardizing AI-based transaction frameworks. Although financial terms weren't disclosed, the alliance could influence how quickly AI-driven, agent-led transactions become mainstream in global payments.
Dueling decisions on debit interchange <- click to read full story
Federal judges in Kentucky and North Dakota issued conflicting rulings on the legality of the Federal Reserve's debit interchange cap set under the Durbin Amendment to the 2010 Dodd-Frank Act. On Sept. 12, 2025, Judge Gregory F. Van Tatenhove of Kentucky upheld the cap—21 cents plus five basis points and a one-cent fraud-prevention adjustment—saying the Fed properly balanced competing interests. Linney's Pizza, the plaintiff, had argued the rule was "arbitrary and capricious," claiming the Fed ignored true transaction costs. The judge disagreed, calling transaction-specific pricing "nigh impossible" given the volume of daily payments.
His ruling contrasts sharply with a North Dakota decision by Judge Daniel M. Traynor, who found the Fed exceeded its authority and included costs Congress never intended. That case, brought by Corner Post Inc., is paused pending appeal. Meanwhile, the Fed's proposal to cut interchange caps by more than 30 percent remains stalled. Federal Reserve Governor Michelle Bowman, now vice chair overseeing bank supervision, publicly opposed the cut, underscoring continuing divisions over debit fee regulation.
Settlement proposed covering Discover lawsuits <- click to read full story
A proposed settlement aims to resolve three related federal lawsuits alleging Discover misclassified certain consumer credit cards as commercial cards, causing inflated interchange fees for merchants, acquirers and processors. Filed in the U.S. District Court for the Northern District of Illinois, the suits claim misclassification led to higher processing costs between Jan. 1, 2007, and Dec. 31, 2023. Discover denies wrongdoing, and the court has not ruled on the merits. If approved, the settlement would provide financial relief and clarify procedures for affected parties.
Notices were sent beginning Sept. 11, 2025, to class members via mail and email, explaining rights, options and deadlines for submitting electronic claims. A dedicated information portal—www.discovermerchantsettlement.com—offers FAQs and updates on the case. Industry observers said the dispute highlights the complexity of card classification and the potential costs of errors over long periods. The settlement is expected to bring closure for thousands of merchants while reinforcing scrutiny of issuer and processor compliance with interchange fee categories.
PayPal's next act: Connective tissue for the future of digital commerce <- click to read full story
PayPal is aggressively repositioning itself at the center of digital commerce through new partnerships, asset sales and blockchain initiatives. A two-year deal with Blue Owl Capital will offload about $7 billion in U.S. buy now, pay later (BNPL) receivables, freeing capital while PayPal continues to underwrite and service loans. Simultaneously, PayPal's stablecoin PYUSD gained new traction after blockchain network Stable adopted it for cross-chain settlement, supported by an investment from PayPal Ventures.
These moves coincide with a strategic partnership with Google to co-develop AI-based "agentic commerce" frameworks, embedding PayPal's services more deeply into Google's platforms. PayPal also launched Pay with Crypto, allowing merchants to accept over 100 cryptocurrencies with instant fiat conversion and low fees. Analysts see a cohesive strategy emerging: offload risk where prudent, double down on growth sectors like stablecoins and AI, and position PayPal as infrastructure connecting fiat, crypto and AI-enabled payments. If successful, the company could redefine its role from processor to central connector in next-generation commerce.
North Carolina considers surcharge cap <- click to read full story
North Carolina lawmakers are weighing a bill to cap credit card surcharges at 2 percent, joining a growing list of states regulating the practice. The House Finance Committee approved the measure Sept. 23, 2025; violations would trigger $500 fines. Merchants would have to disclose surcharge amounts at the point of sale or online checkout, or verbally for phone payments. The bill, slated for Jan. 1, 2026 implementation, awaits full House and Senate votes when the legislature reconvenes Oct. 21.
Currently, North Carolina imposes no surcharge limits. Only Massachusetts, Connecticut and Puerto Rico outright ban surcharges, while at least a dozen states set restrictions. The Electronic Transactions Association reported caps ranging from 1 to 3 percent and rules such as signage requirements in Michigan and price-inclusion mandates in Kansas. Supporters say North Carolina's cap would increase transparency and consumer trust; opponents warn it could erode merchant margins amid rising processing costs. The debate reflects ongoing national tension between consumer protection and business flexibility in handling card fees. 
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