Supreme Court Won’t Hear Swipe Fee Appeal

WASHINGTON, D.C. — The highest court in the land will not take on the case of debit card swipe fees.

The U.S. Supreme Court rejected a challenge from retailers who claim the Federal Reserve allows banks to charge businesses too much for handling debit card transactions, according to The Associated Press.

"It is unfortunate that the Supreme Court would not hear about the legal problems with the Federal Reserve's debit swipe fee rules," Lyle Beckwith, senior vice president of government relations for NACS, the Association for Convenience & Fuel Retailing, told CSNews Online. "Banks should not be allowed to use centrally price-fixed fees to make margins of 500 to 1,000 percent or more on debit swipe fees. 

"The Supreme Court would have recognized that those fees are not consistent with the reforms passed by Congress and it's unfortunate they won't have the chance to make that decision," he continued. "Nonetheless, the Fed should now see the error of its ways and revise its rules to correct the gross deficiencies in them."

The court's decision on NACS, fka National Association of Convenience Stores v. Board of Governors of the Federal Reserve System lets stand a federal appeals court ruling that upheld the Fed's cap of 21 cents per transaction on debit card swipe fees. The cap has been in effect since Oct. 1, 2011.

"The court's decision is disappointing because it leaves merchants and their customers paying far more than intended by Congress," stated Mallory Duncan, senior vice president and general counsel for the National Retail Federation. "Federal agencies have flexibility in implementing our nation's laws, but do not have the discretion to blatantly ignore the wishes of elected officials and the clear language of the statute. The court's ruling means retailers will keep paying billions of dollars more than they should, and that fee-hungry banks will continue to rake in unearned profits that ultimately come out of consumers' pockets. We will continue to press the issue."

In August, NACS along with several other merchant associations and retailer companies filed a writ of certiorari with the Supreme Court, asking the court to hear their appeal of the D.C. Circuit Court of Appeals ruling that upheld the Federal Reserve's debit swipe fee rules.

This legal battle over swipe fees has gone several rounds up to this point, with the retailers winning some and the Fed winning others. NACS, the National Retail Federation, National Restaurant Association and other groups sued the Fed in 2011. A U.S. district court in July 2013 sided with the retailers and ordered the Fed to retool the fees.

However, the Fed appealed and a three-judge appeals panel in March reversed the lower court's decision and upheld the Fed's rules. That ruling set up the possible showdown in the U.S. Supreme Court.