|
RAPAPORT... The U.S. District Court for the District of Columbia ruled today that the implementation of debit card swipe fee reform, established by the Federal Reserve, was inconsistent with the intent of the law, also known as the Durbin Amendment. The court determined that the Federal Reserve Board of Governors 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. The National Retail Federation (NRF) stated that, not only had retailers and restaurants known the board of governors grossly misapplied the swipe fee law in 2010, but manufactured a standard that was two to three times higher than the Fed staff recommended. The NRF, the Food Marketing Institute, the National Association of Convenience Stores, Oil Miller Co. and Boscov’s Department Store LCC filed the initial complaint with the court. NRF's senior vice president and general counsel, Mallory Duncan, stated that small ticket transaction fees skyrocketed under the misapplied law. “Congress clearly told the Fed to introduce competition and transparency into the debit card marketplace by making multiple networks available, so as to reduce swipe fees for merchants and their customers. The Fed failed to do so, and the court rightly ruled against them as a result. Today’s decision is the first step in setting these initial wrongs right and will ensure that swipe fee reform is done correctly.” The Retail Industry Leaders Association (RILA), which was not a party to the lawsuit, also applauded the court's ruling. “Retailers welcome today’s ruling and the opportunity to ensure the law is finally implemented as intended. The flawed Federal Reserve rules have muted the law’s intended benefits to merchants and consumers and resulted in further distortions in the already broken electronic payments market,” said Bill Hughes, RILA's senior vice president for government affairs. Debit swipe fee reform was passed by Congress in 2010 and required the Federal Reserve to ensure that the fees charged to merchants that accept debit cards be “reasonable and proportionate” to the cost of the transaction. That law exempted 99 percent of all banks and applied only to those banks with more than $10 billion in assets. In 2010, after aggressive lobbying by credit card companies Visa, MasterCard and the biggest banks, the Federal Reserve capped debit swipe fees for non-exempt institutions at roughly 24 cents, more than three times higher than the cap it had proposed just months before and more than five times higher than the Federal Reserve found such transactions to cost, according to RILA.
|