Supreme Court Sides With Retailers in Debit Card Swipe Fee Case

The Supreme Court handed a victory to retailers battling debit card “swipe fees.”

The high court’s 6-3 ruling Monday (July 1) sided with the plaintiffs in a case challenging a Federal Reserve rule on the amount businesses pay banks when customers make purchases with debit cards.

The store, Corner Post, and its fellow plaintiffs claimed that the Federal Reserve’s Regulation II violates debit card swipe fee regulations.

A lower court had dismissed the suit, saying the plaintiffs had missed a six-year statute of limitations that applies to this sort of litigation. The Supreme Court agreed to hear an appeal on the timeliness of the suit last year.

In their ruling Monday, the court’s conservative majority found that the countdown on the six-year statute of limitations does not begin until a plaintiff is affected by a regulation.

While Monday’s ruling is likely to be overshadowed by the outcome of another matter — the immunity case involving former President Donald Trump — a decision in Corner Post’s favor could have a broader impact, making it easier for plaintiffs to challenge federal regulations.

The President Joe Biden administration has said as much, per a Reuters report Monday, which noted that the White House has argued that agreeing with the plaintiffs “would substantially expand the class of potential challengers” to government regulations and threatens to “increase the burdens on agencies and courts.”

Swipe fees, also known as “interchange fees,” reimburse banks for the costs associated with offering debit cards. These fees are determined by card networks but capped by the Federal Reserve at 21 cents per transaction.

The Fed has also proposed lowering that cap even further to 14 cents, a move that smaller banks say makes it harder for them to fight financial crime, as the fees help them invest in anti-fraud measures.

The National Retail Federation, meanwhile, has argued that even with the seven-cent reduction, the fees will still be too high, and that reduced issuer costs will mean that “the largest issuers in the country are further guaranteed a higher profit margin under the proposed rule.”

Meanwhile, last week saw the continuation of another case involving swipe fees, as a federal judge rejected Visa and Mastercard’s proposed $30 billion settlement with merchants in a decades-old lawsuit.

U.S. District Judge Margo Brodie said the two companies are able to handle a “substantially” bigger settlement, arguing that the proposal would have “disproportionately and inequitably” benefited small, local merchants over bigger chains like Walmart and Target.