WASHINGTON (March 28, 2014) — A U.S. appeals court has overturned last July's district court ruling that the Federal Reserve improperly inflated the fees banks and card companies are allowed to charge retailers when their customers swipe debit cards.
The fees are currently set at 21 cents per transaction plus 1 to 3 cents more to cover fraud prevention and other adjustments. The Specialty Equipment Market Association's (SEMA) Washington staff reported that retailers argued the fees are too high to compensate the financial institution's “authorization, clearance or settlement” costs.
According to SEMA, the Dodd-Frank financial reform law provides the Federal Reserve with oversight of fees for processing debit card transactions (“interchange” fees). When that legislation was being debated in 2010, SEMA and 54 other trade associations asked Congress to limit the amount card companies could charge merchants when processing payments. Congress addressed swipe fees but not credit card fees.
The Federal Reserve had initially recommended a 12-cent transaction cap but then raised the fee to 21 cents, SEMA said.
The lower court ruling had not taken effect pending the appeal.
Retailers will now consider asking the appeals court to reconsider its decision or petition for a Supreme Court review.
For more information contact SEMA's Stuart Gosswein at [email protected].
