The legal challenge over the transaction fees that retailers are forced to charge customers when they swipe a debit card moved one step closer to the Supreme Court Aug. 18, when retail and merchant groups petitioned the nation’s highest court to hear the case.
The National Association of Convenience Stores (NACS), the Food Marketing Institute (FMI), the National Restaurant Association, the National Retail Federation (NRF), Boscov’s department stores and Miller Oil Co., petitioned the Supreme Court to examine a March 2014 decision that upheld the Federal Reserve’s rules governing interchange fees.
The National Retail Federation (NRF) said in a statement that the debate over debit card swipe fees is “of staggering importance” and that it had no choice but to pursue this case as far as possible. “There’s so much at stake here for U.S. retailers and their customers,” NRF Senior Vice President and General Counsel Mallory Duncan said. “When a federal agency blatantly disregards the clear intent of legislation passed by Congress and signed into law by the president, that’s a dispute that cannot be ignored.”
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 can be charged for all debit transactions on card issuers with more than $10 billion in assets.
In July 2013, a judge for the U.S. District Court in Washington rejected the Federal Reserve’s regulations governing swipe fees, ruling that the agency set the cap too high on debit-card transactions. The District Court Judge said the Federal Reserve Board disregarded Congressional intent when deciding how much banks can charge for the transactions.
However, A U.S. Appeals Court in March 2014 reversed the lower court’s decision and upheld the Federal Reserve’s rules governing interchange fees.
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