The legal challenge over transaction fees that retailers are forced to charge customers when they swipe a debit card could head to the Supreme Court, after the National Retail Federation said it plans to petition the nation’s highest court to hear the case.
The “issues are sufficiently important that we ought to present them to the Supreme Court,” Mallory Duncan, senior vice president and general counsel for the National Retail Federation (NRF), told . The petition is due by July 21.
Retailers have been operating under the current rules since Oct. 2011, despite an on-going legal battle over where the transaction limits should be set.
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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