A federal appeals court has upheld a lower court ruling striking down the Federal Reserve’s 21-cent cap on debit card interchange fees.
Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.
This latest decision was handed down Monday (Oct. 26) by a three-judge panel of the 8th U.S. Circuit Court of Appeals, affirming a ruling last year that vacated the cap.
The decision stems from a suit brought by Corner Post, a North Dakota convenience store, challenging the Fed’s implementation of the Durbin Amendment to the 2010 Dodd-Frank Act.
That 2011 regulation lets financial institutions with more than $10 billion in assets collect 21 cents for each debit transaction, along with 0.05% of the transaction amount and an additional cent for fraud prevention.
But last year’s ruling from U.S. District Judge Daniel M. Traynor found that the Fed’s statute “creates two—and only two—allowable cost buckets,” and that implementing a third unlawfully shifted billions of dollars from merchants to issuers.
Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!
“Congress did not hide an ‘easter egg’ of a third cost category in the Durbin Amendment, particularly when those additional costs would benefit banks at the expense of merchants and consumers,” Traynor wrote.
In this new ruling, the Eighth Circuit said the Federal Reserve must establish a fee structure that strictly respects statutory boundaries, requiring the agency to come up with a compliant pricing standard.
Source link
