Swipe Fee Cap to Stay in Place Pending Appeal
WASHINGTON, D.C. -- Six weeks after ruling against the debit card swipe fee rules that went into effect in October 2011, a federal judge has agreed to keep the current rules in place, for now.
"Upon consideration of those pleadings, oral arguments and the entire record, I conclude that the [current rules] should remain in place while our Circuit Court reviews my decision," Leon wrote in a ruling entered Friday.
In a court filing in late August, the Fed said maintaining the regulations would provide stability in the debit card marketplace while disagreements on the rules are settled. Craig Shearman, vice president of the National Retail Federation (NRF) agreed with the request, noting "otherwise, we'd be back to the Wild, Wild West of no caps on swipe fees." NRF is a plaintiff in the case.
The Fed is appealing Leon's decision to strike down the swipe fee rules, which have been in place since Oct. 1, 2011. In his ruling, the judge said the Fed disregarded Congress' intent when it decided how much banks can charge retailers to process debit card transactions. As part of the decision, the Fed was instructed to rewrite the rules governing swipe fees. The current rules, in part, include a 21-cent cap.
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, filed suit in November 2011, claiming they would be "substantially harmed" by the fees set by the Fed.
In his July 31 ruling, Leon wrote: "Upon consideration of the pleadings, oral argument and the entire record therein, the court concludes that the board has clearly disregarded Congress' 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."