Retailers are facing tough questions and an uphill battle in the fight to lower debit card transaction fees.
Industry groups are urging the Federal Appeals Court to uphold a lower court's ruling that debit card transaction fees are inflated. The litigation against the Federal Reserve's misinterpretation of debit reforms legislated by Congress under the Durbin Amendment, is urging the Appeals Court to agree with U.S. District Court Judge Richard Leon's July 31 decision. Judge Leon ruled that the U.S. Federal Reserve had "clearly disregarded" Congress' intent "by inappropriately inflating all debit card transaction fees by billions of dollars."
But just 21 days after Judge Leon's ruling, the Fed announced it would appeal and had no plans to curb fees while the appeal was pending. According to reports, hearings on Jan. 17 were fiesty, with the judges indicating no fee reductions would be forthcoming.
A three-judge panel challenged arguments by the National Retail Federation, Food Marketing Association and other retail groups that the Federal Reserve allowed card networks to set transaction fees too high and in violation of the 2010 Dodd-Frank law, reported Dow Jones, according to Convenience Store News.
"We urge the three-judge panel to concur with Judge Leon's decision and with what merchants witness every day," said FMI Senior Vice President of Government and Public Affairs Jennifer Hatcher in a statement. "The Federal Reserve did not follow the law when crafting a rule that continues to impose a fee that is neither reasonable nor proportional on merchants."
But the three-judge panel appears to be leaning in favor of the finanical insitutions.
The Fed seeks to cap fees at 21 cents per transaction, down from the previous average of 44 cents, but Dodd-Frank sets fees that are "reasonable and proportional" to the costs of a given transaction. Those fees are too high, according to retail groups.
For more see:
-this Wall Street Journal article
-this Convenience Store News article
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