Court rules in NACS’ favor in case against the Federal Reserve on debit swipe fees.

July 31, 2013

The U.S. District Court in Washington, D.C., issued its opinion today in our challenge to the Federal Reserve Board’s debit card interchange rules.  The opinion reads:

“Upon consideration of the pleadings, oral argument, and the entire record therein, the Court concludes that 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.  Accordingly, the plaintiffs’ motion is GRANTED and defendant’s motion is DENIED.”

You can read the entire decision here​.

This fundamentally means that we won on all counts.  This case was brought by NACS and several other trade associations, along with several merchants, including NACS retail member and past Chairman Jeff Miller.  Our claim was that when the Federal Reserve Board released its final rule on the Durbin Amendment, the debit fees that the largest banks were allowed to charge were far higher than the law would allow.  This resulted in an approximate 22-cent per transaction fee — far above the 7- to 12-cent fee originally proposed by the Fed.

Along with the higher fee, this created the paradoxical situation where small ticket transactions conducted with debit cards actually generated higher fees.  Also, the ability for merchants to choose between unaffiliated routing was hampered by the final rule.

There will be a status conference to determine next steps on August 14.  Stay tuned for additional information in tomorrow’s NACS Daily.

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