On Friday, the Supreme Court agreed Take up an issue Ask the Federal Reserve to lower maximum debit card withdrawal fees.
An amendment by Sen. Dick Durbin (D-Ill.) to the 2010 Dodd-Frank Act directed the Fed to set a “reasonable” cap on the fees banks charge merchants each time a customer swipes a debit card. These fees must also be “proportionate” to the costs incurred by the banks.
The Fed, implemented in 2011, caps fees charged to financial institutions with assets of $10 billion or more at 21 cents, with an additional 1 cent for fraud prevention and 0.05% for fraud recovery.
The Supreme Court has agreed to hear an appeal by Corner Post, a North Dakota-based truck stop and convenience store, challenging the Federal Reserve’s cap on debit card swipe fees.
The Corner Post joined the North Dakota Retail Association and the North Dakota Oil Marketers Association in the original 2021 case in U.S. District Court in Bismarck.
The plaintiffs argued that the cap set was higher than Congress intended. The Fed originally proposed a 12-cent cap, but said it raised that limit after looking at all affected industries.
“Banks’ transaction processing costs have declined significantly, and these fees continue to raise costs for merchants and prices for consumers,” Stephanie Martz, chief administrative officer and general counsel of the National Retail Federation (NRF), said in a statement. Martz was initially a co-counsel in the case.
“Retailers are now paying twice what they should have had the Fed followed the law. If the Fed does not act on its own, the courts must enforce the law.”
The National Salvation Front, which is not a party to the case, celebrated the Supreme Court’s decision. She also supports Durbin’s recent bill that could lower credit card swipe fees.
The Credit Card Competition Act would require financial institutions with more than $100 billion in assets to offer at least two network options for processing credit card transactions. One of these networks must be an option other than Visa and Mastercard, which dominate the credit card network market in the United States.
Visa and MasterCard are among the financial institutions and credit unions represented by the Electronic Payment Coalition, which strongly opposes Durbin’s bill.
The coalition pointed to the decision to cap debit card fees as an example of why Congress should not impose similar limits on credit cards.
“We think Durbin’s opponent was an abject failure,” EPC Executive Director Aaron Stetter told The Hill in a previous interview. 2015 Richmond Fed Study Which found that the vast majority of merchants did not pass these savings on to customers in the form of lower prices.
EPC did not immediately respond to The Hill’s request for comment.
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