The National Retail Federation has asked the U.S. Supreme Court to review a ruling that left the Federal Reserve's cap on credit card transactions at 21 cents. The retail industry has collectively pushed for a lower cap for so-called swipe fees.
NRF called the issue one of "staggering importance," and filed a petition asking the Supreme Court to consider the case. The National Association of Convenience Stores, the Food Marketing Institute, the National Restaurant Association and several NRF member companies are also named on the petition and were plaintiffs in the original lawsuit.
The Dodd-Frank Consumer Protection and Wall Street Reform Act of 2010 required the Federal Reserve to adopt regulations to produce debit swipe fees that were "reasonable and proportional" to the fixed cost of processing a transaction. Incremental costs of authorizing, clearing and settling each transaction were allowed to be considered but fixed costs were not. The Fed calculated the average incremental cost at 4 cents per transaction and initially proposed a cap no higher than 12 cents, but eventually settled on 21 cents after heavy lobbying from the financial services industry, according to NRF.
This lowered costs from an average of 45 cents before the cap but the NRF and others argue the 21 cent figure includes costs that went beyond those allowed. A lawsuit was filed in 2011, a ruling issued in July 2013, ordering the Fed to recalculate the cap at a lower level. That ruling was appealed and the ruling overturned.
"This case is of staggering importance," the petition filed today said. "The economic burden of the [Fed's] error will be felt virtually every time a consumer swipes a debit card."
"There's so much at stake here for U.S. retailers and their customers that we have no choice but to pursue this case as far as possible," said Mallory Duncan, NRF senior VP and general counsel. "When a federal agency blatantly disregards the clear intent of legislation passed by Congress and signed into law by the president, that's a dispute that cannot be ignored."
The petition argued that the Circuit Court made a number of legal errors and "bent over backward to find ambiguity" in Dodd-Frank while ignoring the "text, structure and purpose" of the law.
The battle between retailers and credit card companies has raged on for more than seven years. 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 have continued to look for relief in the form of legislation and new forms of digital payments, arguing that credit card fees must be slashed.
-See this NRF press release
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