The National Retail Federation is again speaking out in favor of lower debit card swipe fees for merchants. The NRF today asked an appeals court to uphold a judge's ruling that the Federal Reserve set its cap on debit card swipe fees too high and that the cap needs to be reduced.
The Fed, on the other hand, is defending its decision to maintain swipe fees at nearly $0.21, an amount the banks contend is too low to cover their costs and make a legitimate profit. At this amount, banks allege the fees are costing them up to $8 billion a year.
The fees were lowered from $0.44 cents, but retailers maintain that the fees would be lower still if the Fed had followed guidelines in the Dodd-Frank financial regulation law.
"Nearly four years after the law was passed, debit swipe fees are still far higher than they should be, and banks are raking in billions of dollars in unearned profits every year as a result," NRF Senior Vice President and General Counsel Mallory Duncan said in a statement. "Instead of doing what Congress ordered, the Fed gave in to pressure from big banks—and retailers and their customers are paying the price. It's time for the Fed to follow the law instead of catering to the industry it is supposed to regulate."
A three-judge panel of the U.S. Circuit Court of Appeals is scheduled to hold a hearing in Washington Friday on the Federal Reserve's challenge of the July ruling that the $0.21 cap that took effect in 2011 was too high. The ruling came in a lawsuit brought by NRF and other groups.
The battle between retailers and credit card companies has lasted for seven years now, as both parties continue to disagree over the fees charged for processing credit card transactions. Merchants first sued Visa and MasterCard in 2005, accusing the two companies of fixing the fees charged to merchants each time their customers used their credit or debit cards. U.S. credit card swipe fees have tripled in the past decade, and retailers maintain that the credit card companies are overcharging merchants for each swipe while preventing them from steering customers to cheaper forms of payments.
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