The Federal Reserve has asked the court to keep the current regulations governing swipe fees in place while it appeals the recent ruling by the U.S. District Court in Washington that it set the cap on debit card transactions too high.
In a new court filing, the Federal Reserve said maintaining the regulations would provide stability in the debit card marketplace while disagreements on rules are settled, according to Bloomberg.
The Federal Reserve said that if the District Court vacated the regulations, there would be no legally binding standards for determining the permissible amount of interchange fees an issuer could receive with respect to a debit card transaction. There also would be no limitations on exclusive routing restrictions imposed by issuers and payment networks, the Federal Reserve said.
Judge Richard Leon in late July ruled that the Federal Reserve disregarded Congressional intent when deciding how much banks can charge for the transactions under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Federal Reserve announced late Aug. 21 that it would appeal that ruling.
The National Retail Federation and other trade groups that represent merchants said they would prefer that the agency didn’t appeal the ruling, according to published reports, but that they support the stay to ensure a cap remains on the debit transaction fees during the appeals process.
The Dodd-Frank law required the Federal Reserve to issue rules ensuring debit card interchange rates are reasonable and proportional to the costs incurred. Effective Oct. 1, 2011, the fees that retailers had to pay on all PIN and swiped debit card transactions changed to 24 cents, though merchant groups believe the fee should have been set substantially lower.
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