Retailers None Too Happy With Appellate Court Ruling

Not surprisingly, retailers expressed dissatisfaction with last week’s appellate court ruling upholding a Federal Reserve rule setting debit card interchange at 21 cents.

Under the Durbin Amendment provisions of the 2010 Dodd-Frank Consumer Protection and Wall Street Reform Act, the Fed was required to adopt regulations that would result in debit card swipe fees that were “reasonable” and “proportional” to the actual cost of processing a transaction.

The Fed calculated the actual average cost at 4 cents per transaction and staff initially proposed a cap no higher than 12 cents, but the agency eventually settled on 21 cents “after heavy lobbying from the financial services industry,” the National Retail Federation noted in a statement.

The federation “is disappointed and remains confident that the Federal Reserve erred when it set the swipe-fee cap far higher than intended by Congress,” said Mallory Duncan, federation senior vice president and general counsel.

In 2013, Judge Richard Leon ruled in the federation’s favor and ordered the Fed to recalculate the cap at a lower level, but the Fed appealed and won.

Last week, PYMNTS.com explained part of the reason why. The federation is considering its options on whether to appeal last week’s decision. 

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