A Judge for the U.S. District Court in Washington this morning agreed with retailers and rejected the Federal Reserve’s regulations governing swipe fees under the Dodd-Frank Wall Street Reform and Consumer Protection Act, ruling that the agency set the cap too high on debit-card transactions.
Judge Richard Leon said the Federal Reserve Board disregarded Congressional intent when deciding how much banks can charge for the transactions. The rule will remain in place, however, pending new regulations or interim standards.
“The Board has clearly disregarded Congress’s statutory intent by inappropriately inflating all debit card transaction fees by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit card transaction,” Leon said in his 58-page ruling.
The Durbin Amendment of the Dodd-Frank Wall Street Reform 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.
The Federal Reserve Board set the per-transaction cap at 21 cents and also allowed for an additional charge of 0.01 cent to cover fraud as well as .05 percent of the sales amount. The new interchange fees could be charged for all debit transactions on card issuers with more than $10 billion in assets.
The National Retail Federation and other trade groups that represent merchants filed the lawsuit against the Federal Reserve challenging the way the central bank set the new debit rates and seeking to have the Federal Reserve recalculate the rates.
This article originally ran in NATSO News, NATSO's member only weekly electronic newsletter. NATSO News is packed with the latest updates on government and business issues affecting the truckstop and travel plaza industry.
If you aren't reading NATSO News, you are missing out. Not a member? Join today or submit a request to receive additional information. If you are a member and not receiving NATSO News, submit a request to be added to the email list.
Subscribe to Updates
NATSO provides a breadth of information created to strengthen travel plazas’ ability to meet the needs of the travelling public in an age of disruption. This includes knowledge filled blog posts, articles and publications. If you would like to receive a digest of blog post and articles directly in your inbox, please provide your name, email and the frequency of the updates you want to receive the email digest.