Banks, Credit Card Cos. May Have to Reimburse Retailers for Swipe Fees
WASHINGTON, D.C. – Retailers may receive reimbursement for debit card swipe fees they've paid since a 21-cent cap on such fees went into effect last October. In a hearing yesterday, U.S. District Judge Richard Leon set a Sept. 16 deadline for the attorneys of the retailers, banks and the Federal Reserve to file briefs on whether such reimbursements should take place, according to several media outlets.
On July 31, Leon ruled that the Fed disregarded Congress' intent when it decided how much banks can charge retailers to process debit-card transactions. The Fed has 60 days to decide whether to appeal this ruling, but during yesterday's hearing, Leon stated that the Fed should move forward with new swipe fee regulations in the meantime, and that interim regulations should be completed by the end of October.
"They can come [home] from where they are on vacation," Leon said of the Federal Reserve Board of Governors. "This is a large-scale matter affecting millions of entities and billions of dollars."
Leon scheduled an Aug. 21 hearing, at which time the Fed is expected to state its position on the proposal for interim regulations and say when they can be put in place.
The original lawsuit was filed by a group of retail associations, including NACS, the Association for Convenience & Fuel Retailing, the Food Marketing Institute, the National Restaurant Association and the National Retail Federation (NRF), which argued that the 21-cent cap lets banks "recover significantly more costs" than permitted by the Durbin Amendment of the Dodd-Frank Wall Street Reform Act.
"We're very pleased to see the court light a fire under the Fed," NRF Senior Vice President and General Counsel Mallory Duncan said in a statement. "These fees have been driving up prices for merchants and their customers for years, and every day that it continues is one day too long. The court is absolutely correct that this is a multi-billion-dollar issue with huge implications for the U.S. economy and needs to be dealt with immediately."